62019TJ0334_RES
Case T‑334/19
Google LLCandAlphabet Inc.
v
European Commission
Judgment of the General Court of 18 September 2024
(Competition – Abuse of dominant position – Market for online search advertising intermediation in the EEA – Decision finding an infringement of Article 102 TFEU and of Article 54 of the EEA Agreement – Exclusive supply obligation – Contractual restrictions)
Dominant position – Abuse – Concept – Objective concept relating to conduct which is such as to influence the structure of a market and having the effect of hindering the maintenance or growth of competition – Obligations on the dominant undertaking – Competition on the basis of merit – Criteria for assessment
(Art. 102 TFEU)
(see paragraphs 102-110, 673)
Competition – Administrative procedure – Commission decision finding an infringement – Burden of proving the infringement and its duration on the Commission – Exhaustive responses from an undertaking to a direct question under a request for information of the Commission – High probative value
(Council Regulation No 1/2003, Arts 18 and 23(1))
(see paragraphs 111, 796)
Competition – Administrative procedure – Commission decision finding an infringement – Judicial review – Review of legality – In-depth review of all the relevant evidence – Purpose and scope
(Arts 102 and 263 TFEU)
(see paragraphs 112, 113)
Dominant position – Relevant market – Delimitation – Criteria – Market for online search advertising – Substitutability of the products or services on the supply side or the demand side – Overall assessment – Taking into account of all relevant factors – Taking into account of undertakings’ replies to requests for information
(Art. 102 TFEU; Commission Notice 97/C 372/03, paragraphs 15, 17, 25 and 36)
(see paragraphs 124-127, 131-136, 139-144, 155-166, 202-208, 214-216, 220-222, 226-228, 232-240, 244-247, 251-253, 257, 258, 264-273, 278-285, 317-324, 328-331, 334, 335, 338-341, 347-350)
Dominant position – Relevant market – Delimitation – Effect of the Commission’s previous decision-making practice – Absence
(Art. 102 TFEU)
(see paragraphs 238, 300, 304, 361, 568-570, 851)
Dominant position – Abuse – Exclusivity clauses in contracts for the provision of online search advertising intermediation services – Whether abusive – Likelihood of restricting competition and foreclosure effect – Challenge by the undertaking concerned – Obligation on the competition authority to demonstrate that the conduct at issue is capable of restricting competition – Taking into account of all the circumstances of the case
(Art. 102 TFEU)
(see paragraphs 379-390, 399, 400, 406, 411-415, 464-466, 501, 502, 548-557, 558-562, 581-583, 595, 607-617, 622, 694‑715, 776-779, 787-789, 831, 832, 835-840, 843-848, 890-901, 927, 938-944, 948-953, 980, 987-991, 998)
Competition – EU rules – Undertaking – Concept – Exercise of an economic activity – Decisive criterion – Legal status and manner of financing of the entity – Irrelevant
(see paragraph 487)
Competition – Administrative procedure – Obligations of the Commission – Diligent and impartial examination – Scope of the obligation – Taking into account of the information collected by the addressee of the statement of objections – Probative value
(Art. 102 TFEU; Charter of Fundamental Rights of the European Union, Art. 41; Council Regulation No 1/2003, Arts 18 and 23(1)(a))
(see paragraphs 512-514)
Dominant position – Abuse – Concept – Foreclosure of a substantial part of the market by a dominant undertaking – Degree of domination of the market concerned – Irrelevant – Necessity of determining a precise threshold of foreclosure of the market – Absence
(Art. 102 TFEU)
(see paragraphs 596, 621)
Dominant position – Abuse – Exclusivity clauses in contracts for the provision of online search advertising intermediation services – Whether abusive – Obligation on the competition authority to use the as-efficient competitor test – Absence – Production by the undertaking concerned of an analysis based on that test – Obligation on the competition authority to examine its probative value
(Art. 102 TFEU)
(see paragraphs 660-667, 880-883, 979)
Dominant position – Abuse – Concept – Objective concept relating to conduct which is such as to influence the structure of a market and having the effect of hindering the maintenance or growth of competition – Necessity of establishing the existence of anticompetitive intent – Absence
(Art. 102 TFEU)
(see paragraphs 678, 679, 981)
Dominant position – Abuse – Objective justification – Conditions – Extent of the burden of proof
(Art. 102 TFEU)
(see paragraph 947)
Résumé
By its judgment, the General Court annuls the decision of the European Commission ordering Google (
1
) to pay a fine for having committed three abuses of a dominant position on the market for online search advertising intermediation. On that occasion, the Court specifies the circumstances to be taken into account in assessing the exclusionary effect of contractual clauses, in particular those imposing an exclusive supply obligation.
Google, an undertaking in the information and communications technology sector which specialises in internet-related products and services, is known in particular for its general search engine, which yields search results presented on pages appearing on internet users’ screens. Some of those results are linked to payment commitments from advertisers, made via Google’s auction platform, and are indicated by words such as ‘ad’ or ‘sponsored’. Since 2003, Google has also operated an advertising intermediation platform called AdSense, for which it has developed a service called AdSense for Search (‘AFS’).
AFS, like other online search advertising intermediation services, allows publishers of third-party websites to display online search ads, in this case from Google, when users submit queries on a website containing an integrated search engine. In this way, the providers of such intermediation services (‘intermediaries’) and publishers share the revenues generated by the display of those ads. As for AFS, advertisers had to associate their ads with keywords that users of the websites concerned were likely to use in a query and, in principle, paid the price resulting from the display of their ads only where users actually clicked on them.
To use AFS, publishers could, inter alia, become either ‘online partners’ of Google by concluding with it a non-negotiable standard contract called an ‘online contract’, or ‘direct partners’ by concluding a ‘Google Services Agreement’ (‘GSA’) that was negotiated individually. In order to conclude a GSA, direct partners also had to complete an order form in which they specified the websites for which they wished to use AFS or a different AdSense service.
Although negotiated individually, GSAs were drawn up on the basis of templates containing inter alia the following clauses:
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until March 2009, an ‘exclusivity clause’ prohibiting the use of services that were the same or substantially similar to, or in direct competition with, those provided by Google under the GSA, for the websites mentioned in the order form;
–
from March 2009, first, a ‘placement clause’ obliging direct partners to display on websites using AFS a minimum number of online search ads from Google and prohibiting the display of competing ads above those from Google or directly adjacent to them and, second, a ‘prior authorisation clause’ requiring direct partners to obtain Google’s approval before changing the display of online search ads, including competing ads.
By decision of 20 March 2019, (
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) the Commission found that Google had committed three abuses of a dominant position resulting, respectively, from the exclusivity clause in GSAs concluded with direct partners that had typically included all of their websites in at least one of their GSAs (‘all sites direct partners’), the placement clause and the prior authorisation clause (together, ‘the clauses at issue’).
According to the Commission, those three clauses pursued the same objective, namely to foreclose Google’s competing intermediaries in order to protect and strengthen that company’s position on the online search advertising intermediation market and the online search advertising markets and, consequently, its position on the general search market. That common objective and the complementary nature of those clauses led the Commission to consider that the three abuses of a dominant position together constituted a single and continuous infringement of Article 102 TFEU which had lasted from 1 January 2006 until 6 September 2016.
Consequently, the Commission imposed on Google a fine of almost EUR 1.5 billion.
By its action before the Court, Google seeks annulment of the contested decision or, in the alternative, annulment or reduction of the amount of the fine.
Findings of the Court
1. Definition of the relevant markets
As a first step, the Court rejects Google’s plea alleging that the Commission erroneously defined the relevant markets at issue, namely those for online search advertising and search advertising intermediation.
As regards the definition of the market for online search advertising, Google claimed, inter alia, that the Commission had not taken into account all the relevant factors for distinguishing online search ads from online non-search ads (‘the two types of ads at issue’).
In that regard, the Court notes that, as is apparent from the case-law and from the market definition notice, (
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) the substitutability analysis must take into consideration not only the objective characteristics of the products and services at issue, but also the competitive conditions and the structure of supply and demand on the market. However, in order to define a product market, the Commission is not obliged to examine all the elements of assessment set out in that notice or to follow a rigid hierarchy of evidence.
In the case at hand, in addition to the characteristics and uses of the two types of ad at issue, the Commission took into account, in an overall assessment, a series of other factors, such as, inter alia, the price of the ads at issue, the investments necessary for the provision of online search advertising services and the conduct of publishers that had decreased their use of online search ads. In addition, the Commission collected the reasoned views of market participants and relied on those views to define the relevant market.
Accordingly, Google does not demonstrate that the Commission disregarded certain relevant factors in its overall assessment of the substitutability of the two types of ad at issue, or that it committed an error of law by devoting a large part of its analysis to the differences in characteristics and uses between those ads.
Moreover, the Court also rejects Google’s arguments that, for the purposes of defining the market for online search advertising, the Commission did not carry out an adequate price analysis by using, in particular, a test analysing the impact of a significant and non-transitory increase of 5 to 10% in the price of online search ads (‘the SSNIP test’).
In the case at hand, in its price analysis, the Commission sent to advertisers, publishers and media agencies requests for information and inter alia asked them a question on how they would react in the event of an increase in the price of online search ads or, in the case of publishers, a reduction in revenues from those ads.
In view of the content of that question, the Court finds that the Commission did not carry out a SSNIP test as defined in the Commission’s market definition notice. However, the Court recalls that, although the SSNIP test is a recognised tool whose results may be taken into account, with other elements, in an overall market definition assessment, systematic recourse to such a test is not obligatory for the purposes of that definition.
The Court also confirms the adequacy of price analysis carried out by the Commission. The replies from market participants to the Commission’s requests for information, accompanied by the reasons underpinning their replies, are among the elements expressly considered relevant in the Commission’s market definition notice, in that they make it possible to evaluate customers’ and competitors’ perspectives and therefore constitute a tool that may be taken into account for the purpose of defining the relevant market.
In conclusion, after having noted that Google neither called into question the accuracy, reliability and consistency of the evidence on which the Commission relied in its overall assessment of substitutability nor demonstrated that the Commission failed to take into account evidence relevant to that end, the Court endorses the definition of the relevant market in the contested decision. It also endorses the finding of Google’s dominant position on the market for online search advertising intermediation, in so far as Google disputed that dominant position solely on the ground that the definition of the relevant market was erroneous.
2. Capability of the clauses at issue to restrict competition
As a second step, the Court examines Google’s pleas disputing that the clauses at issue constituted abuses of a dominant position.
As regards, first of all, the exclusivity clause in GSAs concluded with all sites direct partners, Google criticised the Commission for having found that it had not needed to verify that that clause had been capable of restricting competition.
On that point, the Court observes that Google disputed, during the administrative procedure, with supporting evidence, the capability of the abovementioned exclusivity clause to restrict competition. It also maintained that that clause was objectively justified.
In those conditions, in accordance with the case-law, the Commission could not, as it maintained primarily, limit itself to finding, in order to establish an infringement of Article 102 TFEU, that the exclusivity clause in GSAs concluded with all sites direct partners required them to source all or most of their requirements in terms of online search advertising intermediation services exclusively from Google within the meaning of the judgment in Hoffmann-La Roche v Commission. (
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) It also had to demonstrate that the said exclusivity clause was capable of restricting competition, taking into account all the relevant circumstances of the case.
The Court next examines whether, as Google maintained, the Commission was wrong to consider, in the alternative, that the exclusivity clause in GSAs concluded with all sites direct partners was capable of restricting competition.
As regards the question whether that clause had deterred all direct partners from sourcing from other intermediaries in order to display competing ads on their websites or on certain of their pages, Google criticised, inter alia, the Commission for having referred, in the contested decision, only to the replies of some of those direct partners to the requests for information sent during the administrative procedure.
In that context, the Court notes that, in the contested decision, the Commission could rightly take into consideration certain examples of replies of all sites direct partners as elements capable of corroborating its assessment that the exclusivity clause in GSAs concluded with such direct partners could have deterred them from sourcing at least part of their requirements from Google’s competing intermediaries.
In order to challenge the fact that the exclusivity clause had had such a deterrent effect, Google also relied on a statement of a direct partner that it had itself collected during the administrative procedure. The Commission considered that that statement had limited probative value, on the ground, inter alia, that it did not know how Google had obtained it. Although Google does not have the Commission’s investigative and sanctioning powers and therefore necessarily has to rely on the voluntary cooperation of direct partners, the Court considers, however, that this does not mean that the information collected by Google was necessarily irrelevant, on the ground that its probative value is more limited.
As regards the question whether the exclusivity clause in GSAs concluded with all sites direct partners had prevented Google’s competitors from accessing a significant part of the market for online search advertising intermediation in the EEA, Google claimed, inter alia, that the Commission’s analysis of the market coverage by that clause was inconsistent in that it had taken account, to characterise the foreclosure effect of the exclusivity clause in GSAs concluded with all sites direct partners, the revenues generated by every GSA containing the placement and prior authorisation clauses, including GSAs in which direct partners had not typically included all of their websites.
In that regard, the Court notes inter alia that, in order to assess the effects of the exclusivity clause, the Commission had to take into account all the circumstances of the case and, in particular, determine whether the coverage rate of that exclusivity clause was sufficient for it to enable it to produce a foreclosure effect. In the contested decision, however, the Commission found, first, that the exclusivity and placement clauses were complementary, in particular in that they sought to deter direct partners from sourcing competing ads and, second, that the placement clause had progressively replaced the exclusivity clause in GSAs, such that those two clauses had simultaneously covered different parts of the market during the relevant period. Consequently, contrary to what Google submitted, the Commission could not examine the coverage of the exclusivity clause and that of the placement clause in isolation from each other without disregarding their factual and legal context and partitioning artificially the examination of the coverage of the market.
The Court thus noted, after having examined the coverage rate of those clauses, that the Commission could rightly consider that, having regard to the coverage of the placement clause, the coverage of the exclusivity clause in GSAs in which direct partners had typically included all of their websites could be sufficient to enable that clause to be capable of producing a foreclosure effect between 1 January 2006 and 31 December 2015.
The Court next examines Google’s proposition according to which the Commission failed to prove, by means of the as-efficient competitor test, (
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) that the exclusivity clause in GSAs concluded with all sites direct partners prevented a competitor as efficient as Google from emerging on the relevant market or excluded it. On that point, it notes that the Commission was not required to rely on such a test, which is only one of a number of methods for assessing whether a practice is capable of producing exclusionary effects. Had, on the other hand, Google produced an analysis based on the as-efficient competitor test, which is not the case here, it would have been for the Commission to examine that analysis.
However, after having confirmed the majority of the Commission’s assessments, the Court finds that the Commission’s analysis of the foreclosure effect is vitiated by errors concerning the taking into account of the coverage rate of the exclusivity clause during 2016 and the duration of GSAs.
First, the Court notes that the contested decision does not identify the part of the market for online search advertising intermediation covered by the exclusivity clause in GSAs concluded by all sites direct partners for 2016. Therefore, the Commission did not prove that that clause could produce a foreclosure effect, owing to its coverage, between 1 January 2016 and 31 March 2016.
Second, in that analysis, the Commission did not take due account either of the duration of each of the GSAs concluded with direct partners or of direct partners’ unilateral termination rights.
The Court recalls that, in order to determine whether conduct was in fact capable of producing a foreclosure effect vis-à-vis a competitor at least as efficient as Google, the Commission had to take into account all the relevant circumstances. Regarding, more specifically, an exclusive supply obligation, the Commission had to take into account the duration of that obligation and its economic and legal context.
A large proportion of the GSAs to which the said direct partners had been subject had, individually, a duration of only a few years, even if they had subsequently been renewed or extended, sometimes several times. In the contested decision, the Commission took into account only the cumulative duration of GSAs in which all sites direct partners had typically included all of their websites, and not the duration of each of those GSAs, taken individually, or the duration of each of their possible extensions. Nor did it take into account the actual conditions and the terms under which those extensions had been agreed or the substance of the clauses providing for the unilateral termination rights held by some of the all sites direct partners or the conditions in which those rights could be exercised.
In those circumstances, the Commission could certainly take into account the cumulative duration of GSAs in which direct partners had typically included all of their websites as a relevant circumstance. It could not, however, exclude that those direct partners had the option of sourcing from Google’s competitors at the term of each of their GSAs, or, therefore, hold that the said direct partners had been obliged to source all or most of their requirements from Google for the entire cumulative duration of their GSAs.
The Court concludes that the Commission has not demonstrated to the requisite legal standard that that clause had been capable of deterring all sites direct partners from sourcing from Google’s competing intermediaries or of preventing those intermediaries from accessing a significant part of the market for online search advertising intermediation in the European Economic Area and, consequently, that that same clause had been capable of having the foreclosure effect found in that decision.
According to the Court, the Commission made similar errors in its analysis of the foreclosure effect of the placement clause and of the prior authorisation clause. In that regard, the Commission was right to find that the placement clause was akin to a relaxed exclusivity clause so far as concerns websites that were included in GSAs containing that clause since it reserved the most prominent spaces of direct partners’ results pages for Google ads. So far as concerns the prior authorisation clause, the Commission considered, in the contested decision, that it produced a foreclosure effect similar to that of the exclusivity clause in GSAs concluded with all sites direct partners, on the one hand, and to that of the placement clause, on the other hand.
Consequently, like the exclusivity clause, the duration of the obligation imposed on direct partners, under the placement clause, to reserve the most prominent spaces counts among the circumstances relevant for assessing the foreclosure effect of that clause. The same applies to the duration of the obligation imposed on direct partners, under the prior authorisation clause, to request authorisation from Google before being able to change the display of competing ads. The Commission, however, did not take due account of the duration of those obligations.
The Court considers that the abovementioned errors vitiate all of the restrictions identified by the Commission, such that it has not demonstrated, to the requisite legal standard, that the clauses at issue had been capable of having the foreclosure effect found in the contested decision or, therefore, that they each constituted an infringement of Article 102 TFEU.
Since, in the contested decision, the Commission considered that the single and continuous infringement was characterised only in so far as it consisted of the three separate infringements referred to above, the Court annuls that decision in its entirety.
(
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)	In this case, ‘Google’ refers jointly to Google LLC, formerly Google Inc., and to its parent company, Alphabet Inc.
(
2
)	Commission Decision C(2019) 2173 final of 20 March 2019 relating to a proceeding under Article 102 TFEU and Article 54 of the EEA Agreement (Case AT.40411 – Google Search (AdSense)) (‘the contested decision’).
(
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)	Commission Notice on the definition of relevant market for the purposes of Community competition law (OJ 1997 C 372, p. 5).
(
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)	Judgment of 13 February 1979, Hoffmann-La Roche v Commission (85/76, EU:C:1979:36). According paragraph 89 of that judgment, ‘an undertaking which is in a dominant position on a market and ties purchasers – even if it does so at their request – by an obligation or promise on their part to obtain all or most of their requirements exclusively from the said undertaking abuses its dominant position within the meaning of Article [102 TFEU]’.
(
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)	According to the case-law, that test consists in examining whether the practices of a dominant undertaking could drive an equally efficient competitor from the market.