EU under pressure to slap non-compliance notice on Google over pay-to-play 'remedy'

Comparison shopping websites won't use Chocolate Factory fix

Calls are mounting for the European Commission to issue a non-compliance notice against Google over attempts to address complaints about its market dominance.

In June the commission found Google had abused its general search supremacy to illegally favour its own service over rival comparison shopping websites – landing it a €2.42bn (£2.1bn) fine.

Google is appealing against the ruling and said the concessions it has made meet the commission's requirements for equal treatment.

As a remedy, Google introduced an auction mechanism, allowing price comparison websites to bid for space in its "shopping box", which appears at the top of the results page when a user searches for a product.

However, evidence submitted to the commission by one of the original complainants, Foundem, has argued that this does not comply with the commission's prescribed equal treatment remedy.

It claims that without artificial constraints, Google Shopping could always outbid rivals because its own bids don't cost it anything.

A spokesman for the European Commission said it was closely and actively monitoring the implementation and effects of Google's measures.

"In January, we received Google's first monitoring report on the measures they have implemented. So far, only a very small number of rivals appear in Google's shopping box. In the first place, the key question for us is to find out why only such a small number of rivals appear in Google's shopping box."

Thomas Vinje, spokesman for FairSearch and head of the worldwide competition practice for law firm Clifford Chance, said: "I believe the reason for that is quite clear – competitors do not see they will achieve anything from the auction because of its nature."

He said a convincing case has been made that Google is giving an appearance of equal treatment without actually doing so. "It is not achieving equal treatment, particularly in the sense that Google is taking money from one pocket and putting it into another. In that sense it could be deemed as non-compliant."

If the commission does issue a non-compliance notice, that could result in significant further fines for the ad flinger.

Thomas Höppner, partner at German law firm Hausfeld, which represents several of the search complainants, claimed Google's remedy fails to present consumers with relevant results on the basis of their searches.

"Instead of showing the cheapest offers and best products, the mechanism creates the incentive for companies to display most expensive products with the highest profit margins [because that makes them the most attractive bid to Google]."

A commission mouthpiece said it will require some time to establish the facts behind poor take-up of the auction service.

"Google's next monitoring report is due in May. We will not remain idle in the meantime: we are working with KPMG and Mavens, the experts who are assisting us, to make sure we have the necessary inputs for our monitoring. We are also in ongoing exchanges on the operation of Google's measures with Google and other market participants.

"In short, this issue will stay on our desks for some time to come and continues to be a top priority for us."

The Register has contacted Google for a comment. ®

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