10 April 2019

Competition Newsletter March 2019



In a decision dated January 31, 2019, the French Competition Authority ordered Google to clarify the rules of its advertising service Google Ads with respect to the fee-based online information services...
France Antitrust/Competition Law
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The French Competition Authority issues interim measures against Google regarding its online advertising market practices

In a decision dated January 31, 2019, the French Competition Authority ordered Google to clarify the rules of its advertising service Google Ads with respect to the fee-based online information services and to review its advertiser account suspension procedure.

The Authority had issued similar measures against Google in 2010 with respect to its AdWords service (now Google Ads) on roadside control bypass devices in France (Navx case).

In this decision, the claimant, Amadeus, is active in directory inquiry services and depends heavily on the online advertising department, Google Ads, since it is through this service that Amadeus achieves practically all its traffic.

However, as from January 2018, Amadeus noted the suspension of some of its Google Ads accounts, Google claiming non-compliance with its advertising rules because of the presence of allegedly misleading statements.

Amadeus referred this matter to the French Competition Authority, which considered that Google was likely to be in a dominant position on the online advertising market. To do so, it took into account the fact that its engine totals more than 90 percent of searches, the existence of entry barriers, the significant investments that have to be granted by third parties to be able to develop algorithms as effective as Google's algorithms and finally, the size of the data collected.

The Authority then noted that Amadeus' accounts had been suspended without warning or any clear indication of the alleged breaches, whereas the Google account managers had been involved in the advertising campaigns. They participated in the elaboration of the campaigns, the drafting of the spots and even assured Amadeus of their compliance with the Google Ads rules.
The Authority concluded that these practices could constitute an abuse of a dominant position.

Indeed, Google's practices could not only constitute a sudden termination of commercial relations under conditions that were neither objective nor transparent. But the Authority also ruled that these practices were discriminatory, notably since other advertisers had been able to run advertisements even though they were written in identical terms.

Finding that the alleged practices had caused Amadeus massive losses (-90% between 2017 and 2018) and they might cause a serious and immediate prejudice if they continued, the Authority issued several interim measures pending the decision on the merits.

Google thus received the order to clarify the rules of its advertising service and to review the advertiser account suspension procedure. A formal warning and sufficient notice period have to be provided to allow advertisers to remedy the reported breach. Moreover, Google has to analyze the campaigns proposed by Amadeus' accounts that were not suspended in accordance with the new rules. Finally, its personnel has to be trained on this new procedure.

This decision falls within the increased control exercised by competition authorities against the GAFA. This is illustrated for example by the Commission's decision handed down this month whereby it fined Google €1.49 billion for abusive practices in online advertising or its investigation into Amazon regarding the exploitation of data from the sellers operating on this platform. The German and Austrian authorities are also investigating Amazon for abusive practices relating to access to this platform.

The French Competition Authority authorizes Alsa's takeover by Dr. Oetker subject to a "fix-it-first" type trademark license commitment

On January 29, 2019, the French Competition Authority authorized Alsa's takeover by Dr. Oetker by validating a trademark license commitment.

It should be recalled that if there is a risk of harm to competition at the time of a takeover, the Authority can subject its authorization to compliance with certain commitments that most often involve asset sales.

In this decision, the French Competition Authority agreed to resolve the competition issues identified by the conclusion of a trademark license between the acquiring group and a third party to the operation in the form of a "fix-it-first" remedy, the third party having been identified and validated by the Authority at the time of its decision.

In this case, the Dr. Oetker group, that notably owns the Ancel brand, is present on the markets of manufacture and commercialization of pastry aids (flavored sugars, yeasts, toppings), ready to make desserts, gelling agents and sugars, intended for large and medium supermarkets ("GMS"). The group is also active on the markets of pastry aids and ready to make desserts intended for out-of-home catering and the food industry. Alsa, the target company, is also present on these markets.  As part of this analysis, the Authority noted a risk of harm to competition more specifically on the market of manufacture and commercialization of ready to make desserts to GMS on which the new entity would have become the leader with more than 50 percent of market shares.

The Authority noted that the operation would regroup the market's two main and must-have brands (Ancel and Alsa), that they had unparalleled wide ranges of products, that consumers had a strong tendency to switch from one brand to the other, and that there was no alternative product or credible competitor for the time being.

To remove all doubts regarding the risks of harm to competition, Dr. Oetker offered to grant an Ancel trademark license on the ready to make desserts to Sainte-Lucie for a term of five years, renewable once. This company was approved by the Authority because of its capacity for expansion on the market of manufacture and commercialization of ready to make desserts to GMS, its strong growth and its recent investments in its production capacities.

This trademark license in favor of Sainte-Lucie will allow the emergence of a credible alternative on the activity of ready to make desserts for distributors and consumers. The Authority therefore considers that this trademark license agreement will ensure the maintenance of sufficient competition on the market.

The Commission and consumer protection authorities want clear information on prices and discounts for online purchases

On February 22, 2019, the European Commission and the national consumer protection authorities published the results of a review at European Union level of 560 e-commerce sites that shows that consumers are faced with unclear information on prices and discounts.

Each year, the Commission, with the help of the consumer protection cooperation network, scrutinizes websites in the EU. This "clean-up" consists of a series of controls targeting certain areas, carried out simultaneously by consumer protection authorities in different countries, to determine whether the professionals comply with European law.

According to the Commission, the results of the last screening are alarming. Nearly 60 percent of the sites visited present irregularities in their compliance with EU rules on consumer protection, in particular on the presentation of prices and special offers. For more than 31 percent of sites offering discounts, the offers do not seem to be genuine. On 211 sites, the final price to be paid is higher than the initial price displayed. On 59 percent of the sites controlled, the professionals do not respect their obligation to provide an easily accessible link to the online dispute resolution platform. On 30 percent of the sites, the consumers' right of withdrawal is not indicated clearly.

Following these results, the national consumer protection authorities, with the Commission's help, will take measures to put an end to the unfair business practices. Therefore, companies must make sure that prices are clearly published on their sites.

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