Investigation into allegations of market dominance by the US technology giant highlights the growing antitrust enforcement power of the EC
The European Commission (EC) has spent three years probing the practices of Google to see whether it abused its market dominance. The investigation was scheduled to conclude in early spring with reports that Google was willing to settle with the EU rather than face a fine of up to $5bn.
The case has gained a lot of publicity as Google follows the likes of Microsoft in being subject to EC antitrust scrutiny over market dominance. “Increased scrutiny comes with being a big and successful company,” explains Casto González-Páramo, Head of Competition at Hogan Lovells. “The issue of market dominance, however, can be a bit of a grey area, generally because having a large market share does not mean that a company is dominant.”
Experts expect the EC to increase its investigations into abuse of dominance cases in the future. González-Páramo says companies with a strong market position are aware of this and are increasingly vigilant with their market behaviour, to avoid situations where their commercial practices could be considered to be in the `grey area´.
Indeed, lawyers say it is a thin line between having a high market share and abusing market dominance. Often it is down to matters such as the number of complaints received about a company and some suggest, even geo-politics comes into play questioning whether the EC would undertake such rigorous investigations if Google or Microsoft were European. Either way, Google is evidence of the growing antitrust enforcement power of the EC.
“Google is one of the cases where the EC can really establish itself as the pre-eminent antitrust watchdog for market dominance in the world, particularly if the eventual commitments go beyond those imposed by the FTC,” says José Antonio de la Calle, Found Partner of DelaCalle Abogados, EU, Antitrust and Competition boutique.”The challenge is that many European markets still operate on a local and country basis, so market dominance tends to be an issue for national competition authorities, rather than the EC.”
Market dominance, however, is less of an issue for authorities in Spain, which are prioritising data protection or cartel matters. For example, in December Google was fined €900,000 by the Spanish Data Protection Authority for breaking local data protection rules. There has been little suggestion of market dominance proceedings against Google.
“Spain has one of the most active antitrust authorities in Europe when it comes to cartels, but it is less thorough on market dominance,” González-Páramo observes. “Abuse of dominance cases tend to be technically more complex and therefore more difficult to prosecute than cartel cases.”
Indeed, as around 90 percent of Spanish businesses are small and medium-sized enterprises (SMEs), few market dominance complaints arise because the economy is localised.
“One of the challenges for small companies when facing abusive practices from dominant firms is that they often rely on their business for a great deal of work, so taking a bold approach, by filing an antitrust complaint or taking court action, will only make sense in life-or-death situations,” de la Calle states.
If national authorities are not investigating such cases, this leaves the EC as one of the main outlets for enforcing abuse of dominance. Even so, the scope of potential investigations still remains relatively narrow exactly because the localised nature of most European economies. So far, technology companies operating across borders have been the biggest target, although energy and financial services are two areas that could see movement.
“I think any dominant company active in a market that affects at least two EU jurisdictions may find itself under the scrutiny of the EC,” de la Calle concludes. “While historically there were only a few sectors that did have that pan-European presence, this number is growing exponentially each year thanks to globalisation.”
This may be good news to SMEs in pan-European sectors such as technology, but those facing domestic dominance face a much more uncertain future.