Google Shopping: EU Court Judgment Signals Stricter Enforcement of Abuses of Dominance

The EU’s highest court has rejected Google’s appeal against an abuse of dominance finding and a fine of €2.42 billion in the Google Shopping case. The Court of Justice of the European Union (CJEU) again confirmed that Google abused its dominant position by favoring its own comparison shopping service on the results pages of its general search engine, while demoting the results from competing services.

The judgment of September 10, 2024, is likely to strengthen the European Commission’s already broad remit to approach EU abuse of dominance enforcement in novel ways. Notably, Commissioner Vestager has already suggested that the judgment will pave the way for new interventions, acknowledging that the Commission took legal risks in this case. The judgment is poised to shape antitrust actions in the tech sector alongside the enforcement of the EU’s new rules under its Digital Markets Act.

Some of the key takeaways are outlined below.

Proving illegal access restrictions doesn’t necessarily require application of strict refusal to supply test

Perhaps the most important aspect of the ruling is the official confirmation of the Commission’s broad discretion in framing abuse of dominance cases, particularly in relation to access restrictions. The CJEU emphasized that proving such restrictions, particularly where they involve deliberate actions to discriminate against rivals, does not necessarily require the application of the strict traditional “refusal to supply” test.

In that regard, the CJEU drew a distinction between two categories of access restrictions:

• “passive” refusals of access – where a dominant firm refuses access to infrastructure which it developed and deploys only for its own needs; and
• “active” favoring of a firm’s products/services to the detriment of rivals (i.e., illegal self-preferencing practices) – where a dominant company gives access to its infrastructure but makes that access subject to unfair conditions. Here, the abusive conduct does not lie principally in the refusal as such, but, instead, in the active steps taken to discriminate against rivals.

In relation to the passive refusals of access, the CJEU confirmed the strict “refusal to supply” criteria, including that a product/service must be indispensable and that its absence prevents any meaningful competition, for the case to stand. This higher evidentiary threshold recognizes that forcing a firm to conclude a contract with a third party, such as a competitor, can interfere with that firm’s freedom of contract and right to property and should therefore be confined only to exceptional circumstances. It seems that the scope of what falls under the stricter “refusal to supply” category continues to narrow. The Advocate General’s Opinion issued last week in Google/Enel suggests that the more stringent refusal to supply test applies only in cases where the infrastructure has been “developed for the needs of a dominant undertaking’s own business or have been reserved for its exclusive use.”

In relation to the self-preferencing practices (including other types of access restrictions), the CJEU generally found that a more relaxed legal test could apply when certain criteria (set out below) are met. Such an approach was considered to be appropriate even though rectifying such self-preferencing infringements might require the exact same, or functionally equivalent, remedies as an outright refusal to supply or allow access (i.e., to mandate access, impose structural or functional separation, or bring an activity to an end).

Self-preferencing practices can amount to a standalone abuse of dominance

Although the CJEU confirmed that there is no general obligation of “equal treatment” (i.e., even a dominant platform does not have to treat its own affiliates the same as third parties), it recognized that self-preferencing practices could constitute an abuse of dominance.

The CJEU determined that a finding of abusive self-preferencing requires a robust case-by-case effects analysis, and such practices would only be prohibited when certain criteria are met. In particular:

• Material market power ‒ only those with material market power should be subject to scrutiny in relation to potentially abusive self-preferencing practices. The CJEU acknowledges the General Court’s assessment of Google’s “superdominant” position on the market, which has placed Google under an even stronger obligation not to impair competition.
• Market characteristics ‒ the CJEU emphasized the significance of overall market characteristics (such as high barriers to entry) and the importance of a dominant company’s infrastructure (here, Google’s general search) for enabling third parties to effectively compete.
• Lack of efficiencies and objective justifications ‒ any efficiencies or objective justifications will be considered, though demonstrating those is often challenging.

We anticipate that future decisions by the European Commission in self-preferencing cases will provide a clearer framework for assessing self-preferencing practices under EU competition law.

The Commission can choose how to evaluate anti-competitive effects

The CJEU clarified that it suffices for the Commission to prove only potential anti-competitive effects, as opposed to actual effects. The Commission is also free to apply different methods of analysis depending on the specific conduct being examined. For example, the CJEU flagged that the Commission did not have to apply the “as-efficient” competitor test, as it was not a relevant and appropriate method in the circumstances.

Having said that, the CJEU emphasized that despite the Commission’s flexibility in selecting its method of analysis, any assessment of anti-competitive effects must be made “in the light of all the relevant factual circumstances, irrespective of whether they concern the conduct itself, the market(s) in question or the functioning of competition on that or those market(s).” What is more, the Commission must bring forward “specific, tangible points of analysis and evidence” demonstrating such effects, signaling an emphasis on a thorough and comprehensive effects-based analysis.

Conclusion

The CJEU’s judgment carries significant implications for dominant companies, as it broadens the Commission’s authority to tackle abuse of dominance in new and innovative ways. We expect the judgment to further embolden the Commission to take an even more proactive and aggressive approach to Article 102 enforcement, pushing the boundaries of what constitutes an abuse of dominance.

Thank you to Ignacio Montaño Díaz, trainee for Sidley's Antitrust practice, for his significant contribution to this Sidley Update.