Record EU competition fine largely stands after appeal

Out-Law News | 14 Sep 2022 | 1:33 pm | 1 min. read

The EU General Court has largely upheld the European Commission’s decision to impose a record fine under competition rules over practices relating to the Android mobile operating system and their effects on competition in certain technology markets.

The Commission imposed a €4.343 billion on Google in July 2018 for what it determined was an abuse of a dominant market position, citing “illegal restrictions” it said the company had imposed in agreements with mobile device manufacturers and mobile network operators.

On appeal, Google succeeded in annulling one aspect of the Commission’s findings and in obtaining a reduction on the original fine imposed – down to €4.125bn. The General Court otherwise upheld with the Commission’s decision.

The Commission’s original decision focused on three types of “restrictions”. The first concerned contractual terms that required mobile device manufacturers to pre-install Google's 'search' app and 'Chrome' browser on devices running on Google’s Android operating system in order to be able to obtain a licence from Google to use its ‘Play Store’ app store. The second concerned terms that required the manufacturers not to sell devices running versions of the Android operating system not approved by Google to obtain licenses necessary for the pre-installation of the Google Search and Play Store apps.

It was in relation to the third identified restriction that Google had success on appeal.

In its decision, the Commission took issue with provisions contained in revenue share agreements that Google had concluded with mobile device manufacturers and mobile network operators. Under those agreements, the manufacturers and operators were granted a share of Google’s advertising revenue provided they undertook not to pre-install a competing general search service to Google search on a predefined portfolio of devices. The General Court annulled the Commission’s decision that the portfolio-based revenue share agreements constituted, in themselves, an abuse.

The court revised down the fine the Commission originally imposed after assessing that the “particularities of the progress of the infringement over time in the light, in particular, of its variable intensity” required the level of fine to be determined by reference to different parameters to the ones the Commission had relied on.

Google has previously defended its "partner agreements" and said the business model it operates when selling its Android mobile operating system is good for both device manufacturers and consumers. At the time of the Commission’s decision, Google chief executive Sundar Pichai said the Commission had ignored the competition that Android mobile devices face from phones running on Apple's iOS software. He also said the decision "ignores the new breadth of choice and clear evidence about how people use their phones today".

In response to the General Court’s ruling, a Google spokesperson said: “We are disappointed that the Court did not annul the decision in full. Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world.”