Self-Preferencing And Abuse Of Dominance: The CJEU Judgment In Google Shopping And Beyond

On 10 September 2024, the Court of Justice of the European Union upheld the €2.4 billion fine imposed on Google by the European Commission for abusing its dominant position through self-referencing in its Google Shopping service. The ruling clarifies anti-competitive practices in the digital sector and strengthens the Commission's role in regulating the major platforms. The ruling may also influence the application of the Digital Markets Act and the draft guidelines on exclusionary abuses of dominance. Despite this ruling, Google continues to face investigations in Europe and the United States.

Key words: Google Shopping – CJEU – Self-preference – Abuse of dominant position – Competition – Digital Markets Act (DMA) – European Commission – Fine – Digital market – Tech regulation

In its landmark judgment in the Google Shopping case delivered in Grand Chamber on 10 September 2024¹ (hereafter, the "CJEU Judgment"), the Court of Justice of the European Union (CJEU) upheld the 2.4 billion euros fine imposed by the European Commission (the "Commission") on Google Inc. and its parent, Alphabet Inc., in 2017. The fine was imposed for abuse of Google's dominant market position in online search markets through self-preferencing, meaning in essence that Google favoured its own comparisonshopping service via a more prominent display in its search results while demoting rival comparison-shopping services' results.

Beyond being a clear victory for the Commission, the CJEU Judgment brought helpful clarifications for competition aw enforcement with respect to abuses of dominant positions. It is also important for its confirmation of the thorough analysis of the case carried out by the General Court at first instance. It is, however, only one piece of a broader set of cases against Google in the European Union (EU). It merits to be analysed in the context of current enforcement tools in the digital space, notably the Commission's draft Guidelines on the application of Article 102 of the Treaty on the Functioning of the European Union to abusive exclusionary conduct by dominant undertakings ("Draft Guidelines")² and the Digital Markets Act (DMA).³

After recalling the context and background of the CJEU Judgment (I), this contribution analyses its key legal findings (II) before reflecting upon its wider impact and implications (III).

I. CONTEXT AND BACKGROUND OF THE CJEU JUDGMENT

A. The Applicable Legal Framework

Abuse of dominance is unilateral conduct using dominant market power (or a dominant position) to damage market competition and ultimately welfare.⁴

Article 102 of the Treaty on the functioning of the European Union (TFEU) prohibits "[a]ny abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it [...] as incompatible with the internal market in so far as it may affect trade between Member States".

The case law of the EU courts has further clarified the boundaries of the infringement. A dominant position is the power to behave to an appreciable extent independently of its competitors, its customers, and consumers.⁵

Mere possession of the required degree of market power is not sufficient. Article 102 TFEU provides a nonexhaustive list of potentially problematic conduct in its paragraphs (a) to (d) covering directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; limiting production, markets or technical development to the prejudice of consumers; applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage, or making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which have no connection with the subject of such contracts.

Over the years, the Commission and the EU courts have moved from a traditional form-based approach to prohibited conduct under Article 102 TFEU to focus more generally on the analysis of economic effects. Nevertheless, a dominant undertaking has a special responsibility in the EU not to allow its behaviour to impair genuine, undistorted competition on the internal market.⁶ However, the case law also confirms that Article 102 TFEU does not seek to ensure that competitors less efficient than the undertaking with the dominant position should remain on the market and that competition on the merits may, by definition, lead to the departure from the market or the marginalisation of competitors that are less efficient than the dominant undertaking.⁷ If the dominant company can establish an objective justification for its conduct, such as achieving a legitimate objective of protecting or enhancing a public interest, defending its commercial interest or generating efficiencies not otherwise available, assessed on the basis of proportionality, no abuse will be found.⁸

More recently, competition law decisions have addressed competitive concerns in digital markets, such as the Google Shopping case, and led to the assessment of the behaviour of dominant companies in the light of new theories of competitive harm.⁹

In this context, the term "self-preferencing" describes the behaviour of a dominant undertaking actively giving preferential treatment to its own products compared to those of competitors, mainly by means of non-pricing behaviour.¹⁰ Although obviously logical market behaviour for commercial undertakings in a competitive context, competition law qualifies the conduct as abusive when exercised by companies with market power, in particular digital platforms, considering also the risks linked to their vertical and conglomerate integration.

B. Commission Investigation and Decision

The Commission's investigation of Google Shopping was opened in 2010 based on a complaint filed the year before by Foundem, a British price comparison website, which alleged to be the victim of unfavourable treatment in Google's search results.

Google's search engine, Google Search, led to a list of organic blue links and other information in response to an inquiry. The service was/is free of charge for the consumer but financed by advertisements and sponsored results.

Foundem alleged that when Google launched Google Shopping, it began to demote Foundem's offerings in search results and that advertisements managed by Google through its shopping unit were enriched with pictures. Other companies joined Foundem's complaint, arguing that Google systemically favoured its own services over competing offerings.

Although Google and the Commission worked on an understanding on possible commitments at several times throughout the proceedings, which would have allowed to Commission to close the file without a fining decision, third parties found these commitments insufficient. In 2015, the Commission addressed a statement of objections to Google with respect to Google Shopping. It reached the provisional conclusion that the conduct consisting in the more favourable positioning and display, in Google's general search results pages, of Google's own comparison-shopping service compared to competing comparison shopping services, constituted an abuse of a dominant position infringing Article 102 of TFEU. The Commission separated this investigation from that into other business practices by Google, which became the object of a separate statement of objections.¹¹

In June 2017, the Commission concluded its investigation and imposed a fine of 2.42 billion euros on Google and Alphabet for anticompetitive behaviour in online price comparison services.¹²

In the decision, the Commission distinguished the separate comparison-shopping market from the general Internet search market, in which Google was found dominant in all EEA countries and found that Google had abused its market dominance in general Internet search by giving a separate Google product, Google Shopping, an illegal advantage in the separate comparison shopping market.

In particular, according to the Commission,¹³ on the one hand, Google had systematically given prominent placement to its own comparison-shopping service: Google's comparison shopping results were displayed, in a rich format, at the top of the search results, or sometimes in a reserved space on the right-hand side. They were placed above the results that Google's generic search algorithms consider most relevant. This happened whenever a consumer typed a product-related query into the Google general search engine, in relation to which Google wanted to show comparison shopping results. This meant that Google's comparison-shopping service was not subject to Google's generic search algorithms.

On the other hand, rival comparison-shopping services were subject to Google's generic search algorithms, including demotions (which lower a search entry's rank in Google's search results). According to the Commission, evidence showed that even the most highly ranked rival comparison-shopping service appeared on average only on page four of Google's search results, and others appeared even further down. In practice, this meant consumers very rarely saw rival comparison shopping services in Google's search results.

The Commission explained that it did not object to the design of Google's generic search algorithms or to demotions as such, nor to the way that Google displayed or organised its search results pages (e.g., the display of a box with comparison-shopping results displayed prominently in a rich, attractive format) but rather to the fact that Google had leveraged its market dominance in general Internet search into a separate market, comparison-shopping.

C. The General Court Judgment¹⁴

Google and Alphabet appealed the Commission's decision before the General Court of the EU.

In 2021, the General Court upheld all operative elements of the Commission's decision but partially annulled it on the monopoly maintenance in general search argument.

In a nutshell, importantly, the General Court found that self-preferencing could constitute an abuse of dominance, thereby confirming a new category of behaviour constituting an abuse within the meaning of Article 102 TFEU. However, it held that a finding of abusive selfpreferencing requires a robust case-by-case effects analysis, taking into account the particular circumstances of the practices in question.

In essence, the General Court underlined that selfpreferencing practices do not have to be assessed in the light of strict indispensability criteria. While the General Court noted that Google's general search service was akin to an essential facility (§ 224), it concluded that Google's conduct did not have to be assessed in light of traditional essential facilities and refusal to provide access case law, in particular the Bronner¹⁵ case law (§ 240). According to that case law, it must be established whether access to a dominant provider's products or services is indispensable to a competitor's offering, such that a refusal to provide access will effectively eliminate competition. In the General Court's view, Google's conduct did not simply amount to a refusal to provide access, but involved an unjustified difference in treatment in the form of Google favouring its own comparison-shopping service. Such self-preferencing conduct does not necessarily need to meet the conditions of indispensability and elimination of all competition to be found abusive. However, the General Court made it clear that self-preferencing practices can be prohibited only when there is an anticompetitive effect, or at the very least a potential anticompetitive effect (§ 438).

The General Court also confirmed the Commission's assessment on market definition, in particular as to the little competitive pressure on Google from merchant platforms (§ 52) so that these are not part of the same relevant market.

However, the General Court partially annulled the Commission's decision. It considered that, as regards the market for general search services, the Commission did not establish that Google's conduct had had any (even potential) anticompetitive effects and therefore annulled the finding of an infringement in respect of that market alone.

As to the fine, the General Court made its own assessment of the facts and concluded that the annulment of the part of the Commission's decision regarding the market for general search services had no effect on the amount of the fine since the Commission did not take the value of sales on that market into consideration in order to determine the basic amount of the fine. Also, the infringement was of a particularly serious nature and was adopted intentionally, not negligently so that no reduction of the fine was warranted.

The General Court judgment was appealed by Google and Alphabet, leading to the CJEU Judgment.

II. THE CJEU'S KEY LEGAL FINDINGS

Google raised four grounds of appeal before the CJEU, all of which were dismissed. The most significant elements of the CJEU's reasoning are discussed hereafter.

First, the CJEU rejected Google's argument that its conduct had to be assessed under the refusal to supply test from the Bronner case law, thereby confirming the General court's reasoning on this point. The CJEU found that the boxes in which Google Shopping's results had been displayed did not constitute a separate facility from Google's general results pages (§ 105). Since Google's competitors had access to the general search page, no refusal of access to a facility was at issue. Thus, Bronner did not apply but the practices at issue constituted separate forms of leveraging abuse under Article 102 TFEU, namely giving access to its infrastructure but making that access, provision of services or sale of products subject to unfair, discriminatory conditions (§ 111). For such practices, the Bronner criterion of indispensability was not a necessary condition to establish abuse.

Second, regarding the assessment of the notion of competition on the merits, the CJEU rejected Google's argument that the General Court wrongly treated evidence of effects as circumstances indicating a lack of competition on the merits. According to the CJEU, the General Court had correctly considered that it had to look at all the relevant factual circumstances to assess whether conduct was competition on the merits and the circumstances it had highlighted were relevant to that effect (§ 166‑171). According to the CJEU, relevant factual circumstances taken into account included those that concern the market in question and the context in which the conduct arises, namely the positive network effects resulting from increased traffic to comparison shopping providers, the behaviour of users when searching online, and the impact of diverted traffic, meaning that the proportion of traffic diverted from competing shopping services could not be effectively replaced by other sources.

Third, as to Google's arguments relating to the counterfactual analysis and causality, the CJEU recalled that a causal link is one of the essential constituent elements of an infringement of competition law which is for the Commission to prove (§ 224). However, the counterfactual analysis is just one of the various tools at the Commission's disposal to evidence a causal link between a conduct and its effects. The CJEU agreed with the General Court that in some situations, such as in the present case, identifying a credible counterfactual scenario can be arbitrary or even impossible so that the Commission cannot be required to systematically establish such a counterfactual scenario (§ 231). The Court noted that it was permissible for the Commission to rely on a range of evidence without being systematically required to use any single tool, such as a counterfactual analysis, to prove a causal link (§ 228).

Fourth, regarding Google's argument relating to the "as-efficient competitor" concept and the role of the asefficient competitor (AEC) test, Google had argued that, in assessing whether its practices were abusive, the Commission should be required to consider the effectiveness of competing comparison-shopping providers and should have applied the AEC test.

In this respect, the CJEU recalled its standard case law according to which the objective of Article 102 TFEU is not to ensure that competitors less efficient than the dominant undertaking remain on the market (§ 263), but indicated that this statement does not imply, however, that any finding is subject to proof that the conduct concerned is capable of excluding an as-efficient competitor (§ 264). It added that the AEC test is likely to be relevant where the dominant undertaking has produced such evidence to show that its conduct is not capable of restricting competition and that the Commission is required to demonstrate the abuse of a dominant position by considering various criteria, such as inter alia the AEC test where relevant (§ 266).

In the present case, the conduct in question consisted of discrimination that allowed Google to divert traffic from competing comparison-shopping service providers. Given that the ability of competing shopping services depended on the availability of traffic, the CJEU found that the General Court had not erred in concluding that it would not have been possible for the Commission to obtain objective and reliable results concerning the efficiency of Google's competitors in light of the specific conditions of the market (§ 268).

Since none of Google's grounds of appeal were successful, the appeal was dismissed in its entirety.

III. IMPACT AND IMPLICATIONS

The CJEU Judgment is significant for several reasons: it confirms the Commission's firm stance towards dominant digital platforms as well as the reasoning set out in the Draft Guidelines with respect to self-preferencing. It could also influence the assessment of self-preferencing practices in the context of the DMA.

A. Confirmation of Commission's Firm Stance Towards Dominant Digital Platforms

The CJEU Judgment provides comfort to the Commission with respect to its treatment of digital giants like Google in its quest to ensure that digital markets remain competitive. Former Commissioner Vestager commented the case by stating the following:

However, importantly, the CJEU Judgment clarifies that self-preferencing is not inherently abusive and that the specific context, market conditions, and the exclusionary effects of such practices must be carefully examined.

B. Self-Preferencing in the Draft Guidelines

As indicated in their initial paragraphs, the Draft Guidelines set out principles to assess whether conduct by dominant undertakings constitutes an exclusionary abuse under Article 102 TFEU in the light of the case law of the EU Courts. In this way, the Commission seeks to enhance legal certainty and help undertakings self-assess whether their conduct constitutes an exclusionary abuse under Article 102 TFEU. Although not binding on them, these Guidelines are also intended to give guidance to national courts and national competition authorities of the Member States in their application of Article 102 TFEU. Although based on the case law of the EU Courts, they are without prejudice to the interpretation that the latter may give to Article 102 TFEU through relevant developments in the case law in the future.

Regarding the assessment of self-preferencing, the Draft Guidelines heavily rely on the judgment of the General Court in Google Shopping. Hence, the General Court's reasoning now being confirmed by the CJEU Judgment, one can safely assume that the final version of the Draft Guidelines will leave at least this part unchanged.

In essence, the Draft Guidelines indicate that to establish whether self-preferencing is liable to be abusive, it is necessary to assess whether granting preferential treatment to the dominant undertaking's own products departs from competition on the merits and whether it is capable of producing exclusionary effects (§ 160).

As regards the first condition, in addition to the factors mentioned in the Draft Guidelines to show that a given conduct departs from competition on the merits based on the specific circumstances of the case, the following factors are held to be specifically relevant (§ 161): (i) whether the preferential treatment takes place on a leveraging market that constitutes an important source of business for competitors in the leveraged market, which competitors cannot effectively replace through other means; (ii) whether it is likely to influence the behaviour of users, irrespective of the intrinsic qualities of the leveraged product; and (iii) whether the preferential treatment is likely to be contrary to the underlying business rationale of the dominant undertaking's activities in the leveraging market, for instance by being contrary to its interests or those of its customers in that market.

As regards the analysis of the conduct's capability to produce exclusionary effects, the Commission states that self-preferencing can produce exclusionary effects on the leveraged market or on both the leveraged and the leveraging market. If the self-preferencing takes the form of a combination or succession of practices, the analysis of effects should take into account the overall effects of those practices (§ 162).

C. Self-Preferencing and the DMA

The DMA is a directly applicable EU law aimed at making markets in the digital sector fairer and more contestable. In order to do so, it establishes a set of clearly defined objective criteria to identify "gatekeepers". Gatekeepers are large digital platforms providing so-called core platform services, such as online search engines, app stores, or messenger services. Google has been designated as a gatekeeper by the Commission. Hence, it will have to comply with the obligations and prohibitions listed in the DMA.

The DMA complements, but does not change EU competition rules, which continue to apply fully. The Commission is in the driver's seat to ensure enforcement, albeit helped by competent national authorities.

The DMA was not at issue in the Google Shopping case since the latter is based on the application of the general competition rules by the Commission and the contested Commission decision predated the DMA in any event. Hence, it is uncertain to what extent the CJEU's approach to Google's conduct may provide guidance on how the Commission might enforce the new obligations under the DMA.

The DMA's scope of application is more limited in that it only regulates conduct of entities previously identified as gatekeepers. It allows such gatekeepers to promote their own products and services if rivals are subject to the same treatment. However, the DMA does not define equal treatment. Article 6 of the DMA provides (§ 5) that gatekeepers shall not treat more favourably, in ranking and related indexing and crawling, services and products offered by the gatekeeper itself than similar services or products of a third party. In this respect, gatekeepers must apply transparent, fair and non-discriminatory conditions to such ranking. This provision clearly relates to practices of self-preferencing.

It is found that this ban raises challenging practical implementation issues since next to identifying and detecting practices amounting to self-preferencing, the Commission will have to propose compliance measures that it can monitor effectively.¹⁷

In practice, Google points out that, in order to comply with the DMA, it has implemented more than 20 product changes with respect to search results.¹⁸

IV. CONCLUSION

As former Commissioner Vestager has suggested, the CJEU Judgment may pave the way for new interventions, acknowledging that the Commission took legal risks in this case. It will help shaping competition law actions in the tech sector alongside the enforcement of the EU's new rules under the DMA. One may expect the Commission to take an even more proactive approach to Article 102 TFEU enforcement, pushing the boundaries of what constitutes an abuse of dominance, although this will now be the work of the new Commissioner responsible for competition policy who is obviously also facing a changed and challenging geo-political climate.

While the CJEU Judgment has brought the Google Shopping saga to an end in the EU, Google still faces a range of legal battles at both sides of the Atlantic. In the EU, it is appealing additional, significant EU fines of several billion euros, notably in relation to its Android mobile operating system and its AdSense ad platform. It is also facing ongoing investigations into its advertising technology (adtech). In the United States, the Justice Department has accused Google of operating an unlawful monopoly over the digital advertising ecosystem by integrating its ad products, self-preferencing its ad exchange and acquiring adtech companies to stifle competition.

Finally, Google's ultimate loss in the EU courts in the Google Shopping matter may also make it face claims in civil courts throughout Europe for damages suffered since 2008 when the infringement started in some Member States, according to the Commission's decision, which is now confirmed.

Footnotes

1. CJEU, 10 September 2024, Google and Alphabet v Commission (Google Shopping), C-48/22 P (Reference LexNow / ID L233988E4).

2. See https://competition-policy.ec.europa.eu/public-consultations/2024-article102-guidelines_en. 

3. Regulation (EU) 2022/1925 of 14 September 2022 on contestable and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act), OJ L 265, 12.10.2022, pp. 1–66.

4. D. Healey, "Abuse of dominance, Global Dictionary of Competition Law", Concurrences, art. No. 20101.

5. CJEU, 13 February 1979, Hoffmann-La Roche & Co. AG c. Commission, 85/76 (Reference LexNow / ID 19894).

6. CJEU, 9 November 1983, Michelin c. Commission, Case 322/81, § 57 (Reference LexNow / ID 13274).

7. CJEU, 6 September 2017, Intel c. Commission, C‑413/14 P, § 133‑134

8. D. Healey, "Abuse of dominance, Global Dictionary of Competition Law", see footnote 4, and case law cited. 

9. See F. Bostoen, "Abuse of Platform Power, Leveraging Conduct in Digital Markets under EU Competition Law and Beyond", Concurrences, 2023, pp. 182‑183, referring to the Google Shopping decision as "browsing for a fitting theory of abuse".

10. General Court of the EU, 10 November 2021, Google and Alphabet c. Commission (Google Shopping), T-612/17, EU:T:2021:763, § 240.

11. COMP/C-3/40.411—Google Search (AdSense). This investigation concerned an online advertising intermediation service called AdSense for Search ("AFS"). AFS allowed the publishers of websites containing integrated search engines to display ads linked to the online queries that users could submit on those websites. In that way, publishers could receive a part of the revenues generated by the display of those ads. To use AFS, publishers generating sufficient turnover could inter alia negotiate with Google a Google Services Agreement, which contained clauses restricting or prohibiting the display of ads from services competing with AFS.

12. Commission decision of 27 June 2017, Case AT.39740 – Google Search (Shopping), C(2017) 4444 final.

13. See Commission factsheet on the decision of 27 June 2017, available at https://ec.europa.eu/commission/presscorner/detail/en/memo_17_1785.

14. See footnote 10.

15. CJEU, 26 November 1998, Oscar Bronner GmbH & Co. KG c. Mediaprint Zeitungs- und Zeitschriftenverlag, C-7/97.

16. See speech of 10 September 2024, "Remarks by Executive Vice-President Vestager following the Court of Justice rulings on the Apple tax State aid and Google Shopping antitrust cases", available at https://ec.europa.eu/ commission/presscorner/detail/en/speech_24_4624. 

17. See C. Carugati, "How to implement the self-preferencing ban in the European Union's Digital Markets Act", Policy Contribution, Policy Contribution 22/2022, Bruegel. 

18. See https://blog.google/around-the-globe/google-europe/complying-with-thedigital-markets-act/. 

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