Google Faces Uphill Battle in Appealing EU Android Fine
July 19 2018 - 11:57AM
Dow Jones News
By Daniel Michaels
BRUSSELS -- Fining Google $5 billion is one thing, making it
stick is another.
Google parent Alphabet Inc. said within hours Wednesday it would
appeal the European Union antitrust fine for abusing the dominance
of its Android operating system.
The company faces an uphill battle with its appeal -- but maybe
not an insurmountable one, say lawyers and legal scholars, citing a
court ruling involving Intel Corp. last year.
The European Commission, the EU's executive arm that brought the
case, usually wins such appeals -- European law gives it a strong
hand, courts tend to defer to it and its cases are painstakingly
built over months or years.
Following an embarrassing string of losses on appeals of merger
cases in the previous decade, the commission in 2004 improved its
economic analysis of deals and increased the rigor of its
arguments, say former competition officials and lawyers. Since
then, almost no commission competition ruling has been
rejected.
"The commission's track record is formidable," said Assimakis
Komninos, a competition lawyer at White & Case in Brussels.
Its record is particularly strong in the type of case brought
against Google, abuse of dominance. Google is accused of stifling
competition by forcing handset makers to bundle its apps with
Android, which it offers free.
EU law places a particular onus on companies that dominate a
sector and tries to promote competition even if only potential harm
can be shown, said Ioannis Lianos, a professor of global
competition law at University College London. The approach
contrasts with U.S. law and its enforcers, which focuses on
demonstrated harm over market structure.
Of 15 appeals to abuse-of-dominance cases from 2000 to 2016, the
commission won 11 outright and faced partial annulment in four, Mr.
Komninos said.
However, that could change following a decision in September by
the European Court of Justice, the EU's highest court, to send back
to a lower court a 2009 ruling by the commission against Intel. ECJ
judges faulted the lower court's assessment of commission analysis
of Intel's sales practices. The commission had fined Intel EUR1.06
billion over loyalty rebates to customers.
A review by the lower court is unlikely before next year. It
could still side with the commission or fault it narrowly. But
observers see the case as a rare opening for legal challenges.
"Until a few years ago, I would have said that Google's chances
on appeal are not high because of courts' deference" to the
commission, said Michael Carrier, a professor at Rutgers Law School
who specializes in antitrust law. The economics-centered approach
ordered by the ECJ in the Intel case "could help Google" undermine
the commission's case against it, he said.
It could also help Google's appeal of the commission's $2.7
billion fine imposed last year on its web-shopping service, and a
$1.23 billion fine levied in January against Qualcomm Inc., lawyers
say.
The commission's hand has been so strong in competition cases
that some accused companies settle cases rather than appealing
them, say lawyers in Brussels. One senior EU judge last year noted
a drop since 2010 in the number of appeals filed and urged
companies not to hold back.
Aggressive appeals of merger cases from the 1990s and subsequent
commission losses improved the quality of its rulings, say
attorneys.
Antitrust enforcers were humbled by judges on some of their most
high-profile cases, including the rejection in 2001 of General
Electric Co.'s proposed purchase of Honeywell International. The
companies appealed and in 2005 an EU court upheld the prohibition
but only on a technicality. The commission's central grounds for
rejecting the deal was "vitiated by a manifest error of
assessment," the court ruled.
Write to Daniel Michaels at daniel.michaels@wsj.com
(END) Dow Jones Newswires
July 19, 2018 11:42 ET (15:42 GMT)
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