Competition law prohibits any practice which prevents or restricts competition. Competition is essential as, should one firm gain monopoly in any single market, this would negate any necessity for the development of new ideas or technology and to ensures that pricing is fair and competitive in comparison with rivals.
Google has a dominant position holding more than approximately 90% of the search market and more than 75% of the online search advertising market. It has breached EU competition law by abusing its dominant market position to restrict its rivals from displaying search adverts. It has done this by imposing anti-competitive contractual restrictions on third-party websites. These contracts also stated that website owners must get written permission from Google when making changes to how rival advertisers were displayed. This allowed Google to guarantee that they themselves received the most attractive, profitable adverts and were shielded from competitive pressure.
This ensured that Googles’ rivals were unable to grow and increased Google’s monopoly over that market. This meant that website owners were forced to rely on Google to remain profitable by selling advertising space as its’ competitors could not afford the same prices.
This is not the first instance that Google has been fined in relation to competition law. Last year, the EU competition authority hit Google with a record €4.34bn fine for using its popular Android mobile operating system to block rivals.
Smaller business may be thinking that they will not be captured by competition law as their actions would not have the same impact as a global firm like Google.
However, this is not the case. Competition law must be considered in all instances where competition is restricted in a particular market, not only in relation to the actions of those in a dominant position. Such restriction includes but is not limited to:
- refusal to supply
- fixing purchase or selling price
- limiting production or investment
- placing another at a competitive disadvantage
- limiting technical development
For advice on your rights and obligations regarding competition law, please do not hesitate to contact Phil Crawley on 01302 965354 (Doncaster) 0114 272 184 (Sheffield)