Report: EU Preparing To File Formal Antitrust Charges Against Google

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While it’s still possible that the European Commission and Google will settle, it now appears that the company will face formal antitrust charges in Europe. This is something that Google worked diligently to avoid and until very recently seemed very unlikely.

Several months ago a settlement appeared nearly certain. However strong political objections and fierce lobbying by Google’s critics and competitors killed it. Now a report in the Wall Street Journal asserts that Margrethe Vestager, who late last year succeeded Joaquín Almunia as the European Commission’s antitrust chief, is reportedly readying formal charges.

Almunia had strongly favored settlement with Google. He worked with the company and introduced several waves of settlement proposals (e.g., “rival links“) only to have each one in turn attacked and ultimately discredited by intense lobbying and anti-Google research.

Over the course of the five year investigation antipathy toward Google grew among European politicians and regulators. External factors, such as the NSA spying scandal, have also fueled anti-American sentiment in Europe and indirectly hurt Google. In addition, the company holds an even more dominant position in the EU search market than it does in North America.

While former competition czar Almunia apparently had the power to “impose” a settlement he sought to build consensus among stakeholders with “market tests.” He was never able to do so because of perceptions that the proposed settlements “were to easy” on Google.

According the the Journal, Vestager and her team are in the final stages of putting together a formal “statement of objections”:

“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.”

If charges are filed the process would be quite different than in the US. In an American antitrust scenario, the FTC or DOJ are required to sue in court and prove a case against the defendant company. In Europe the Commission has far more discretion and acts as both prosecutor and judge. Initially it doesn’t have to prove anything to a third party.

Google would still be able to try and negotiate another settlement — though it would probably need to look very different from the “rival links” proposals floated in the past. A new settlement proposal could, for example, mean the end of Universal Search in Europe. If Google failed to satisfy the Commission with any new proposals (a higher bar now), the company could face fines of up to 10 percent of gross revenues, which would potentially mean billions.

Google would have the ability to appeal any Commission decision to a European court in Luxembourg. History suggests, however, that overturning any decision of the European Commission is extremely unlikely.

The recent disclosure of an FTC internal report highly critical of Google, recommending legal action that was ultimately not taken, may have acted as “icing on the cake” in the Commission’s apparent decision to move forward with antitrust charges.

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