Newsletter
July-August 2021

SUMMARY

• ARTICLE: GOOGLE again in the spotlight of Member States’ competition authorities

•  BRIEFS

Life of the Law office

Breach of established commercial relations: the Paris Court of Appeal recognises the value of CSR obligations and reaffirms its case law on calls for tenders

ARTICLE

GOOGLE again in the spotlight of Member States’ competition authorities

GOOGLE has been fined twice for abuse of a dominant position: on 13 May 2021 the Italian Competition Authority fined the American company €102 million and on 7 June 2021 it was the turn of the French Authority to impose a fine of €220 million.  The sentence pronounced by the French Competition Authority (ADLC) is aimed at GOOGLE’s activities in the online advertising sector, which is one of its main income sources (between January and March 2020, during the health crisis, GOOGLE generated 55.31 billion in advertising revenues alone).

At the request of three groups of press publishers (Newscorp; the Rossel group; the Figaro group, which subsequently withdrew), the ADLC found that GOOGLE had highlighted its technologies offered under the brand name “Google Ads Manager” throughout the process enabling content publishers to be put in contact with advertisers in order to sell their advertising space.

In practice, when a brand wishes to display an advertisement online, it turns to platforms for buying advertising space. These platforms provide access to multiple auction platforms where advertisers and website publishers such as the New York Post newspaper of the Newscorp group meet to buy and sell advertising space.

GOOGLE has two buying platforms: “Google DV 360” and “Google Ads” and an auction platform, “Google AdX”.

On the advertisers’ side, they have to use tools that allow them not only to display the advertisement on the website or mobile application but also to choose the type of advertising. This tool also takes the form of a platform and obviously GOOGLE has one, “google DFP”.

What the ADLC investigation has shown is that GOOGLE is taking advantage, to the disadvantage of its competitors, of its own platforms in the process of selling and buying online advertisements to the point of having “penalised competition in the emerging online advertising market”. In addition, GOOGLE was able to consolidate its dominant position in this market.

The complexity of these technologies and the algorithms that make them work allows GOOGLE to play with the rules of the competitive market to the point of eliminating all competition.

On the other side of the Alps, the Italian Competition Authority has also sentenced GOOGLE on the basis of abuse of a dominant position. In this case GOOGLE had refused to accept on its Google Play platform an application developed by the Italian company Enel. This decision earned GOOGLE a fine of €102 million.

These decisions follow that of the CJEU in 2019, which had already fined GOOGLE €1.49 billion for abuse of a dominant position in the online search advertising brokerage market.

Although not dissuasive, given the modest value of the fines in relation to GOOGLE’s turnover, these sentences nevertheless encourage legal action to compensate the victims of anti-competitive practices. The victims will be able to rely on the recognition by the Italian and French competition authorities of GOOGLE’s dominant position on the advertising market and the existence of abusive practices. The victims will nevertheless have to be able to prove the damage suffered as a result of these anti-competitive practices.

For a recent example, it is possible to refer to the decision of the Commercial Court of Paris of 10 February 2021: the Court considered that GOOGLE had abused its dominant position in the online advertising sector to the detriment of Oxone (a telephone information operator) and that the company had suffered direct damage as a result of the interruption of its activity and the loss of profit margin; as a result, the judges sentenced the Web giant to more than € 1,000,000 in compensation, as well as to restore Oxone’s access to the Google Ads service, subject to a fine.

Litigation in prospect for our commercial courts, which are already very busy ….

 BRIEFS

Life of the Law office

The Law Firm is very pleased to announce the arrival of Luca Demurtas as an associate.

Luca has been a member of the Paris Bar since 17 June 2015 and a member of the Milan Bar (Italy), where he practiced for several years. Luca’s practice focuses on business and labour law and he has developed particular experience in the field of international commercial relations.

At the beginning of July, Nathalie Cazeau had the pleasure to speak at the seminar organised by the UIA in TURIN on a very topical subject “Drafting Effective International Contracts”.

Breach of established commercial relations: the Paris Court of Appeal recognises the value of CSR obligations and reaffirms its case law on calls for tenders

On 24 March 2021, the Paris Court of Appeal gave an ethical interpretation of the termination of established commercial relations. In this case, the judges considered that the termination of the commercial relationship between Promod and its supplier was justified by the failure to respect the ethical clause contained in the contract. The termination was therefore not brutal, but, on the contrary, justified on the basis of a sufficiently serious breach of contract (see Newsletter April-May 2021).

This ethical analysis is part of the trend towards making actors more aware of the societal issues initiated with the implementation of CSR best practices.

While modernising its jurisprudence by recognising the value of contractual commitments under CSR, the Paris Court of Appeal also confirms some of the fundamental principles regarding the termination of established commercial relations, such as the absence of an established character when the relationship is built on the tender system.

In its decision of 15 April 2021 (No. 18-15899), opposing the company Gervais Transports to Hasbro, the Court reaffirmed this principle.

In this case, for 20 years Gervais Transport had won the tender procedure initiated each year by Hasbro, until 2016, when Hasbro preferred to conclude a contract with another company whose prices were more attractive. Gervais Transport then sued Hasbro for compensation for the damage resulting from the brutal termination of the established commercial relationship. However, its claim was rejected by the Court, which considered that “the regular use of calls for tender is such as to confer on the commercial relationship, whatever its duration, a precarious nature exclusive of any brutal breach”.