The European Union’s second highest court today ruled on two antitrust fines that the bloc issued to Google LLC and Qualcomm Inc. in 2019.

The General Court annulled the penalty imposed on Google, which was the largest of the two at €1.49 billion. It mostly upheld Qualcomm’s €242 million fine, reducing it by about 1%.

Many websites include a search bar that enables users to look up specific pieces of content. Some publishers display ads next to the results that their embedded search engines bring up for readers. Oftentimes, those ads are delivered using Google LLC’s popular advertising services.

The European Commission, the EU’s executive arm, fined the Alphabet Inc. unit over the contracts it had signed with some publishers in connection with their website search ads. Officials took issue with three of the clauses in those agreements.  

For about three years, the contracts included a clause that prohibited publishers from using a competing advertising platform to display ads in website search results. Google later replaced this ban with a different contractual clause that likewise drew antitrust scrutiny. The new provision mandated, among others, that companies source a certain minimum number of adverts through its services.

EU officials also took issue with a third provision in Google’s contracts with the affected publishers. That clause gave the company the ability to veto how publishers displayed ads in their websites’ search results pages. The European Commission determined that this provision and the two others it flagged harmed Google’s competitors. 

In its ruling today, the General Court upheld most of the European Commission’s findings. The court annulled the fine because it found that the three contractual clauses at the heart of the case were not “capable of deterring publishers from sourcing from Google’s” rivals. Another contributor to the decision was that the clauses often only applied to publishers for a few years, which limited their market impact.

The European Commission can appeal the decision to the European Court of Justice, the EU’s highest court. The commission stated that it will “reflect on possible next steps.”

Google welcomed the General Court’s decision. “This case is about a very narrow subset of text-only search ads placed on a limited number of publishers’ websites,” the company said in a statement. “We made changes to our contracts in 2016 to remove the relevant provisions, even before the commission’s decision. We are pleased that the court has recognized errors in the original decision and annulled the fine. We will review the full decision closely.”

The second ruling that the General Court issued today relates to a separate EU fine imposed on Qualcomm. The European Commission issued it in 2019, the same year as the Google fine.

Antitrust officials ordered the chipmaker to pay €242 million for allegedly engaging in predatory pricing practices. In particular, Qualcomm was found to have sold its 3G baseband chips for powering mobile internet dongles below cost between 2011 and 2014. The European Commission determined that the low pricing was intended to force Icera Inc., a competing chipmaker, out of the 3G baseband market.

The General Court agreed with the commission’s conclusions in today’s ruling. It rejected most of Qualcomm’s counterarguments but partly accepted one line of reasoning that challenged the way the way officials had calculated the fine. As a result, the court trimmed the penalty from €242 million to €238.73 million. 

Photo: Unsplash