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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Infederation Ltd v Google Inc & Ors [2013] EWHC 2295 (Ch) (26 July 2013) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2013/2295.html Cite as: [2013] EWHC 2295 (Ch), [2014] 1 All ER 325, [2014] Bus LR D5, [2013] ECC 31, [2013] UKCLR 773, [2014] 1 CMLR 13, [2013] Info TLR 310, [2014] BUS LR D5 |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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INFEDERATION LTD |
Claimant |
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- and - |
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(1) GOOGLE INC (2) GOOGLE IRELAND LTD (3) GOOGLE UK LTD |
Defendants |
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Jon Turner QC and Robert O'Donoghue (instructed by Bristows LLP) for the Defendants
Hearing date: 28 June 2013
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Crown Copyright ©
Mr Justice Roth :
Introduction
Background
The claim
(a) the market for the provision of internet search services for users of the world-wide web in the United Kingdom; and/or
(b) the market for the provision of online search advertising services for advertisers on the world-wide web in the UK.
(i) between June 2006 and December 2009, lowering the position of the Foundem website in the list of Google's search results by the application of a particular algorithmic criterion, which discriminated against Foundem as compared to Google's own vertical search engine and Foundem's competitors;
(ii) between August 2006 and September 2007, lowering the "Quality Scores" accorded to Foundem's website pages, thereby increasing the cost for Foundem of advertising its website via Google's AdWords service to a level far above that applicable to Foundem's competitors;
(iii) failing to deal with Foundem's complaints about these various matters according to a fair and transparent procedure, or to publish transparent rationale and/or criteria to determine when such unfavourable treatment would be applied and, conversely, removed by the process referred to as "whitelisting";
(iv) since December 2007, using its "Universal Search" mechanism which determines the placement of Google's own services, so as to position its own price comparison search product more favourably than Foundem's and other companies' vertical search services; and
(v) since about April 2011, applying its "Panda" update to its algorithms in the United Kingdom thereby significantly lowering the position of Foundem and other vertical search services in Google's search rankings.
The Commission's investigation
"The Commission will investigate whether Google has abused a dominant market position in online search by allegedly lowering the ranking of unpaid search results of competing services which are specialised in providing users with specific online content such as price comparisons (so-called vertical search services) and by according preferential placement to the results of its own vertical search services in order to shut out competing services. The Commission will also look into allegations that Google lowered the 'Quality Score' for sponsored links of competing vertical search services. The Quality Score is one of the factors that determine the price paid to Google by advertisers."
"Is the Commission not concerned with the demotion of certain services in Google search results, in particular as a result of the way Google's algorithm works?
The Commission has concerns with the promotion of Google's own specialised search services within general web search results. The Commission is concerned that this practice unduly diverts traffic away from Google's competitors in specialised search towards Google's own specialised search services, in particular because competing services may be less visible to users as a result.
It appears that the implementation of certain algorithms by Google may lead to both downward and upward movements in the ranking of specialised search services in Google's web search services. The Commission's objective is to make sure that competition in the entire market is preserved so that incentives to innovate remain and users can benefit from a real choice between competing alternatives."
The position under EU law
"When national courts rule on agreements, decisions or practices under Article [101] or Article [102] of the Treaty which are already the subject of a Commission decision, they cannot take decisions running counter to the decision adopted by the Commission. They must also avoid giving decisions which would conflict with a decision contemplated by the Commission in proceedings it has initiated. To that effect, the national court may assess whether it is necessary to stay its proceedings. …"
"Where the Community public interest relating to the application of Articles [101] and [102] of the Treaty so requires, the Commission, acting on its own initiative, may by decision find that Article [101] of the Treaty is not applicable to an agreement, a decision by an association of undertakings or a concerted practice, either because the conditions of Article [101(1)] of the Treaty are not fulfilled, or because the conditions of Article [101(3)] of the Treaty are satisfied.
The Commission may likewise make such a finding with reference to Article [102] of the Treaty."
"When the outcome of the dispute before the national court depends on the validity of the Commission decision, it follows from the obligation of sincere cooperation that the national court should, in order to avoid reaching a decision that runs counter to that of the Commission, stay its proceedings pending final judgment in the action for annulment by the Community Courts, unless it considers that, in the circumstances of the case, a reference to the Court of Justice for a preliminary ruling on the validity of the Commission decision is warranted."
Submissions
Discussion
i) There is no objection as a matter of EU law for the national proceedings to continue to a point short of an actual decision or judgment: MTV Records, per Bingham MR at [29].
ii) It is therefore in the discretion of the court to determine what steps short of trial should be taken in the proceedings: Morgan Stanley, per Toulson J.
iii) That discretion is to be exercised having regard to the overriding objective and the requirement to avoid a decision that is counter to that of the Commission or the EU courts: National Grid, per Sir Andrew Morritt C at [32].
iv) It will normally be appropriate to require the defendants to plead a defence: National Grid and Morrisons.
v) Whether further steps should be taken thereafter will depend on all the circumstances, including:
a) whether the proceedings are a follow-on action subsequent to a Commission decision or an action brought in parallel to a Commission investigation;
b) whether it is possible to reach a view from the status of the EU proceedings as to the likelihood of the English action progressing to trial (e.g. if the Commission has reached a decision finding an infringement and the appeals are only as to the duration of the infringement or as regards the liability of the parent company for the conduct of its subsidiaries);
c) what stage the proceedings at EU level have reached and thus how long the delay until a trial of the action in England is likely to be;
d) how much time has elapsed since the occurrence or commencement of the events covered by the allegations, and thus how far such further delay may affect the availability and credibility of evidence;
e) whether it will be unduly burdensome to the defendants to take such steps at the same time as they are contesting the EU proceedings;
f) whether it is practicable to control the burden and costs of those steps by effective case management.
"In exceptional cases where the public interest of the Community so requires, it may also be expedient for the Commission to adopt a decision of a declaratory nature finding that the prohibition in Article [101] or Article [102] of the Treaty does not apply, with a view to clarifying the law and ensuring its consistent application throughout the Community, in particular with regard to new types of agreements or practices that have not been settled in the existing case-law and administrative practice."
Note 1 Both MTV Europe and Morgan Stanley Dean Witter Bank were decided at a time when the Commission had exclusive jurisdiction to determine the applicability of what is now Art 101(3) TFEU, i.e. prior to the regime introduced by Reg 1/2003 which also enabled the Commission to conclude cases by formal commitment decisions.
[Back] Note 2 Subsequently, disclosure in the first instance of pre-existing documents supplied to the Commission was agreed between the parties, and further issues of disclosure were dealt with by the court: see National Grid [2011] EWHC 1717 (Ch). [Back]