EU Lays Groundwork for Antitrust Charges Against Google

EU Lays Groundwork for Antitrust Charges Against Google

Regulator seeks permission to publish complaints against Internet giant in long-running probe

By Tom Fairless in Brussels and Alistair Barr in San Francisco

Updated April 1, 2015 7:11 p.m. ET

Europe’s competition regulator is preparing to move against Google Inc. in the next few weeks, a person familiar with the matter said Wednesday, setting the stage for charges against the U.S. Internet-search giant in a five-year-old investigation that has stalled three times and sparked a political firestorm.

The European Commission, the European Union’s top antitrust authority, has been asking companies that filed complaints against Google for permission to publish some information they previously submitted confidentially, according to several people familiar with the requests. Shopping, local and travel companies are among those that have been contacted, one of those people said.

Antitrust experts said the requests were a strong indication that formal antitrust charges were being prepared.

A decision to file charges against Google would kick off the EU’s highest-profile antitrust suit since its lengthy campaign that started a decade ago against Microsoft Corp., which paid the bloc €1.7 billion ($1.8 billion) in fines through 2012.

A settlement in Google’s case is always possible. Even if the EU presses ahead with charges, Google could still strike a deal to resolve the bloc’s concerns that the company abuses its dominance in the European search market.

In addition to search, the commission has been investigating whether Google has been “scraping” content from rivals’ sites, and unfairly restricting advertisers and software developers who do business with the search giant. A draft conclusion prepared in March 2013 by the European Commission took the “preliminary view” that Google was abusing its dominant position in all four areas.

Google has denied any anticompetitive behavior. Speaking in Berlin last week, Kent Walker, its general counsel, pointed to a “painfully long list of unsuccessful Google products,” including Google+ and Street View in Germany, as evidence that competition laws were working.

Margrethe Vestager, the EU’s new antitrust chief, has made several statements suggesting that she prefers the legal certainty of formal charges in competition cases over negotiated settlements. Ms. Vestager “is planning to move the case forward in a relatively short time frame,” said a person familiar with the matter.

Ms. Vestager’s predecessor as antitrust chief, Joaquín Almunia, tried and failed three times to reach a settlement with Google, most recently last year. Mr. Almunia considered a settlement better suited to the fast-moving Internet landscape.

The third failure followed fierce criticism of the proposed deal from various companies, including German publisher Axel Springer SE and News Corp, publisher of The Wall Street Journal. They complained Google’s search systematically drove users to Google’s own sites.

Google and the commission haven’t had recent settlement negotiations, according to a person familiar with the matter.

The regulator is moving quickly. The first requests to complainants for unredacted documents came in late February, and most required a response in a few days, people familiar with the matter said. One company was contacted March 26 and had until Thursday to respond, one of the people said. Another was asked for clearance to use documentation of meetings and phone interviews in late 2012 telling staffers about changes Google made to its Google Shopping search service, one of the people said.

“The fact that the commission has been seeking fuller [information] from complainants, against short deadlines [of] a couple of days, shows it is in the final stages of getting a statement of objections together,” said one Brussels-based lawyer representing a Google rival in the case. “It’s part of the choreography you always see.”

The EU’s investigation of complaints that Google abuses its dominance of the online search market to hurt rivals began in 2010. Google handles more than 90% of Web searches in Europe, much higher than its share of the U.S. search market.

Comparison-shopping sites say that when consumers use Google to search for products online, Google features results from Google Shopping prominently and relegates products from rival sites to positions lower down the search page, where they might not be seen.

Experts say the legal hurdles to building an antitrust case in Europe are lower than in the U.S., where antitrust investigators have to prove their case to a judge. In the EU, the commission acts as prosecutor, judge and jury in competition cases. Appeals are heard by EU judges in Luxembourg who have rarely overturned major decisions made by Brussels.

If the commission were to file charges, Google would have about three months to make a case that its actions don’t violate EU law—or it could propose another settlement that would address the charges. It also could request a hearing to argue its case more fully before the commission. After assessing Google’s case, the regulator would issue its final decision—which could then be appealed to the Luxembourg courts.

If the commission found against Google, it could by law fine the company as much as 10% of its annual revenue, which totaled $66 billion last year.

Ms. Vestager has indicated repeatedly that she favors a formal court process to establish a legal precedent. Settlements “should not be a habit,” and should not be sought “at any price,” she said at an event in Brussels last month. Citizens and companies “should see that we are willing to go to court if that is the right thing to do,” she said.

Ms. Vestager met a month ago with Eric Schmidt, Google’s executive chairman. It was the first time she had met with a top Google executive since taking office on Nov. 1.

Last week, she indicated that her priority was to ensure that smaller Internet firms could compete with the industry’s giants.

The latest settlement proposed by Mr. Almunia fell apart following a series of interventions by powerful political players, including a letter from the economy ministers of France and Germany calling for greater concessions from Google, and protests from German publishing houses.

In November the European Parliament passed a resolution calling for a possible breakup of Google, brushing aside an unusual series of objections from the U.S. Congress that the move risked politicizing an antitrust investigation.

—Sam Schechner contributed to this article.


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