Google knows the way

Published On 01/03/2016 | By Taylor Macdonald | Enforcement, Litigation

Our colleagues at King & Wood Mallesons in London recently considered the UK High Court decision involving the company behind the online maps provider (Streetmap) and Google (see their article here).

What was argued?

Streetmap claimed that Google had engaged in anti-competitive conduct by using its search dominance to promote Google Maps by providing a thumbnail map which hyperlinked to Google Maps, known as Maps OneBox, at the top of each Google search result. Streetmap argued that Google had abused its dominance in the search, claiming that the bundling of Google’s search engine and mapping features directed traffic away from competing online mapping products, resulted in the prevention of growth in the relevant mapping market and foreclosed entry by new competitors.

Google argued that its Maps OneBox feature did not amount to bundling, unjustified discrimination or a refusal to supply.

Abuse of dominance in one market with an anti-competitive effect in another?

The High Court found that Google had not abused its dominant position in relation to its Maps OneBox feature. The High Court outlined the relevant legal requirements to show abuse of dominant position under the relevant UK and EU legislation, namely that a defendant must:

  1. hold a dominant position in a relevant market;
  2. by its conduct abuse that position; and
  3. be unable to show that such conduct is objectively justified.

The Court noted that the ‘challenging and unusual’ feature of the case was that the relevant conduct was alleged to be abusive in the market for online maps, which is a market in which the Court did not assume Google enjoyed dominance. The Court found that:

‘it does not follow that conduct will constitute an abuse where the effect is on a separate market where the undertaking is not dominant, if that effect is not serious or appreciable.’

The Court concluded that the introduction of the Maps OneBox was not reasonably likely to appreciably affect competition in the market for online maps. The High Court went on to state that ‘if, contrary to [the] primary finding, it was likely to have such an effect, Google’s conduct in that regard was objectively justified’ and would not amount to an abuse of dominance.

Streetmap has already indicated that it will appeal the decision on the grounds that the High Court raised the standard of proof for abuse of dominance from a mere probability to an ‘appreciable effect.’

An interesting comparison

The European Commission is currently investigating Google Shopping for abusing its dominant position in relation to its comparison shopping tool. The relevant European legislation, article 102 of the Treaty on the Functioning of the European Union (TFEU) mirrors the UK provision, except that it also requires there to be an effect on trade between EU Member States. The result of the EC’s investigation will serve as an interesting comparison to the UK High Court decision, considering the similarities in the facts.

Read our Google Shopping post here.

The Australian position

The equivalent provision in Australian competition law is prohibition on the misuse of market power in section 46 of the Competition and Consumer Act 2010 (Cth), which is substantially different to the relevant UK and EU provisions.
It is clear that section 46 prohibits corporations with a substantial degree of market power from taking advantage of that power in a market, for the purpose of:

  • eliminating or substantially damaging a competitor in that or any other market;
  • preventing the entry of a person into that or any other market; or
  • deterring or preventing a person from engaging in competitive conduct in that or any other market.

However, while the relevant purpose need only be a substantial purpose (potentially among a number of different purposes) the purpose test has been cited by the ACCC as a barrier to it commencing proceedings in circumstances where it otherwise would have done so.

The Government continues to consider whether (and how) to implement the recommendation of the Harper Review to broaden the misuse of market power provision by introducing an ‘effects’ test. Under a section 46 ‘effects’ test, a party would only need to show that the conduct had the effect or likely effect of one of the above things (rather than the purpose that is currently required).

It is not clear that an Australian Court would have found that Google’s conduct amounted to ‘taking advantage’ of a substantial degree of market power (a requirement under section 46). However, it is worth noting that the Harper Review has recommended that section 46 be amended to remove the ‘taking advantage’ requirement. If this recommendation were implemented, it would remove yet another hurdle to successful ACCC enforcement action in misuse of market power cases.

Picture: Courtesy Flickr / Lars Plougmann

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About The Author

is a solicitor in the competition litigation team in the Sydney office of King & Wood Mallesons.

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