Lawyer and economist criticise Google search case

Tom Webb

12 July 2017

Lawyer and economist criticise Google search case

Frédéric Louis, Freedom Film LLC

A lawyer last week slammed the thinking that underpins the European Commission’s Google search case, while an economist described the theory of harm as not being one she could relate to. Tom Webb at GCR Live in Brussels

Frédéric Louis – who is not involved in the investigation, but whose firm Wilmer Cutler Pickering Hale and Dorr works for Google in the US – last week said the remedy imposed in the Google case shows there is “something really, really, really wrong about what’s happened”.

The European Commission’s Directorate-General for Competition knows that its decision will lead to product degradation and a loss in consumer welfare, Louis said, but instead of DG Comp admitting that it is “screwing” consumers through its decision, the enforcer will not say anything about the final remedy.

Louis said the remedy is “problematic” because the commission is “abandoning any pretence that this is for consumers,” rather than for Google complainants and rivals who were unable to benefit from the company’s free system in the same way the search engine operator does.

The WilmerHale Brussels partner also criticised DG Comp’s press release for highlighting a 2006 internal Google email in which an employee said its comparison shopping product at the time was inferior to those of others’.

From what Louis could make out of the rest of the press release, he said, that was “not the product we’re talking about now”; the Google shopping product is actually an improvement, and is now probably superior to rivals’ products, he said.

But the use of that 2006 email out of context enabled DG Comp to spread the belief that its decision protected consumers from having an inferior product “forc[ed] down their throat”, Louis said. The enforcer’s press release “stinks”, and is proof that “we’re talking about politics rather than competition law”, he said.

Cristina Caffarra – who has no involvement in the case, but whose Charles River Associates colleagues have advised Google – had earlier said that the full decision will hopefully feature “something that more closely resembles a recognisable foreclosure theory”, later adding that “[t]his is not on its face a theory of harm that I relate to.”

The modern position on abuse of dominance needs proper articulation of the mechanism, incentives and effects of conduct, she said. Just showing that conduct might shift traffic away from companies is insufficient – it is necessary to show that such a shift has foreclosure effects that undermines competition, Caffarra said.

“It is not clear from where I stand, not having read the decision, whether there is a development of the theory beyond this description of… favouring oneself,” Caffarra said. “When we see the decision we will be able to see if this is being moved along beyond the idea of moving market share from one side to the other, and if there is a coherent mechanism that can... produce that.”    

Following Louis’ comments, however, she said his stance is an “unjustifiably strong way to put it”. Caffarra said that while favouritism is not something she recognises, she did not think that one could take the leap that the decision was entirely fanciful and devoid of substance.

Louis later said that what was said in the commission’s public statements may turn out to differ from the full decision, but said there is “no justification in the press release” for the enforcer’s theory of harm.

“You read this press release and say ‘This is not my competition law, this is not the subject that I studied, and this is not what I’ve been doing for the past 25 years,” he said.

Johannes Erlandsson, a senior economist at Sweden’s Competition Authority, and Helen Kelly, a partner at Matheson in Dublin, also participated in the panel, which was moderated by Nicholas Levy at Cleary Gottlieb Steen & Hamilton. GCR Live 9th Annual Brussels Conference: The bigger picture ended last week.

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