Working together to foster fair competition – EU fines Google

30.06.2017 - Article

The European Commission has fined US internet concern Google. The company has to pay 2.42 billion euros to the EU for abusing its market dominance and favouring its own price‑comparison service Google Shopping. The case shows that as a community of over 500 million people and the largest market in the world, it is possible to take resolute action against global concerns.

Fine of billions for distorting competition

The idea of price-comparison services is to help consumers find the cheapest and most suitable offer on the market. Google has had its own price-comparison service, Google Shopping, on the market since 2004.

Margrethe Vestager, European Commissioner for Competition
Margrethe Vestager, European Commissioner for Competition© dpa/picture-alliance

Following a lengthy investigation, the European Commission has ruled that Google is in breach of the European Union’s antitrust laws as a result of this shopping service. “Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results and demoting those of competitors,” said Margrethe Vestager, European Commissioner for Competition.

The company now has to pay a fine of 2.42 billion euros – more than twice the highest fine handed down so far in competition matters. In setting the amount of the fine, the European Commission took into account the duration and severity of the infringement. The company now has 90 days to end the conduct. Otherwise, it can face penalty payments of up to five percent of the average daily worldwide turnover of Alphabet, its parent company.

Limited choice for consumers

“What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on their merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.”

Since 2008, she said, Google has systematically given prominent placement to its own service in its search engine and demoted rival shopping services. It uses this practice in 13 European Economic Area (EEA) countries, including Germany. The original complaint against Google that led to the investigation being launched came from a UK internet company.

Common rules for fair competition

European flags
European flags© RegierungOnline

The European Commission represents over 500 million people in 28 countries. It is thus easier for the EU to defend its position against one of the largest companies in the world than it would be for individual countries.

An entire Directorate‑General in Brussels ensures that the rules on fair competition are kept on the single market. In order to tackle conduct that distorts free competition, the European Commission can inspect companies, reject projects or hand down fines. The European Commission’s Directorate-General for Competition thus protects European consumers.

It does not differentiate between European and non-European companies – their activity on the European single market is what counts. The European Commission also works bilaterally or multilaterally with competition authorities in third countries.

The Directorate‑General for Competition is also responsible for inspecting monopolies, prosecuting unfair arrangements such as price agreements or the dividing‑up of markets, and monitoring the privatisation of state monopolies and company mergers.

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