Technology

Good News for Google’s Legal Fight With the EU

The search giant gets a reason to be hopeful from a court ruling on Intel.

A Google logo and Android statue at the Googleplex in Menlo Park, California.

Photographer: JOSH EDELSON/AFP

Google got some good legal news on the eve of its challenge to a European Union anti-trust penalty.

An EU court's decision in Intel Corp's fight to overturn a 1.06 billion-euro ($1.26 billion) fine provided the boost to the U.S. search giant by requiring regulators to back up economic findings and do a better job gathering evidence from rivals and customers.

The ruling -- a rare courtroom setback for the European Commission -- arrived in the nick of time for Google, which must file a challenge to its own 2.4 billion-euro antitrust fine in the next few days. Regulators are also preparing to impose fresh penalties against Google in related cases and against another U.S. technology giant, Qualcomm Inc., later this year.

In the ruling Wednesday, the Court of Justice said that a lower court improperly disregarded Intel’s arguments that EU needed to provide economic evidence to back up its findings. That may help companies such as Google, which will try to show that what they do benefits customers even if it might hurt rivals, said Ioannis Kokkoris, a law professor from Queen Mary University in London.

“This is certainly a defeat for the European Commission and indicates a certain relaxation of the formalistic case law on abuse of dominance,” said Assimakis Komninos, a lawyer at White & Case. “The ECJ’s decision is also good news for consumers, because dominant companies may now have more flexibility in offering rebates to high-volume buyers.”

Endorsement

The ruling, however, might not be the panacea that some tech companies in seemingly endless fights with EU Competition Commissioner Margrethe Vestager had been hoping for. The court reserved its toughest words for lower court judges -- not regulators -- and many EU antitrust officials have been campaigning for more economic data for years.

“The commission would presumably have preferred to have had an outright victory in the Intel case today, but some people” in the EU’s antitrust division “may be pleased at this endorsement of the economic effects-based approach” to antitrust cases, said Jay Modrall, a lawyer for Norton Rose LLP in Brussels.

The Court of Justice decision didn’t delve into three key parts of Intel’s appeal when it overturned the lower court’s 2014 ruling. This included the amount of the fine and the EU’s characterization of some of the rebates.

Intel fell foul of EU antitrust rules for using discounts to push out smaller rival Advanced Micro Devices Inc. when computer manufacturers bought all or most of their chips from Intel. The EU said it also paid a German retail chain to keep AMD-based devices off its shelves. Intel argues that its discounts were in line with industry practice.

Rare Setback

The court’s refusal to fully back the EU on Intel marks a change from its overwhelming thumbs up for regulators when it shut down challenges from Microsoft Corp. and Mastercard Inc. That could help Google as it weighs whether to file an appeal within days.

Google had two months and 10 days to file a legal challenge to a June 27 fine and an order to “stop its illegal conduct” over its shopping search results. The clock starts ticking when the company gets a hard copy of the EU decision, which would put the deadline at Sept. 9, a date neither Google, the European Commission, nor the EU court would confirm.

The company separately faces a Sept. 28 deadline to comply with the order to give equal treatment to shopping search rivals. It risks further fines if it doesn’t do so.

Google “will have to do something to avoid these fines,” one of the company’s external lawyers, Maurits Dolmans, told a Brussels conference on Monday. “One option is to file interim measures” asking the court to halt the EU’s order and “another option is to shut off the comparison shopping service,” he said, insisting he spoke in his personal capacity.

The ruling also gives regulators less discretion in how they meets with executives to gather evidence, saying there shouldn’t be a difference between formal and informal meetings.  Officials “must record the interview in full,” the court said.

Such records could potentially handed over to the target of an investigation and could potentially have a chilling effect on companies that want meetings with the EU to remain secret to avoid retaliation from a feared competitor.

 

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