Who blinks first? EU's threat to charge Google over antitrust issues is mostly bluff

Commissioner Almunia wants a deal before he leaves office next year, says expert

The European Union antitrust chief's threat that Google significantly sweeten its proposal or face formal charges of discriminating against rivals in its search results is largely a bluff, a legal expert said this week.

It's very unlikely that Joaquín Almunia, the former Spanish politician who as Competition Commissioner heads the EU's antitrust agency, will press for a "Statement of Objections," as the Belgium-based government calls its official accusations.

"There is little prospect he will do this, for this will have to be handled by his successor," said Nicolas Petit, a professor of competition law at the University of Liege in Belgium, in an email reply to questions. "Almunia is merely trying to ramp up Google's concessions."

Because Almunia's term ends in late 2014, the commissioner is motivated to wrap up the Google antitrust case, said Petit. A Statement of Objections would be just the first step in a process that could drag on for years after Almunia has stepped aside.

On Dec. 20, Almunia told a Spanish radio station that Google's most recent proposal -- its second in the three-year dispute -- was "not acceptable" to his agency.

"The latest proposals are not acceptable in the sense that they are not proposals that can eliminate our concerns regarding competition and in particular regarding the way Google's rivals in vertical search -- search for products and price comparison, restaurants, etcetera -- are being treated," Almunia said last week, according to a translated transcript provided by his office.

Those proposals were the second set tendered by Google since the EU began its investigation in November 2010 after rivals said the company had abused its dominant position in search by favoring its own products and services over competitors' in query results.

In May, the EU rejected Google's first set of concessions, which had been submitted in February. In October, Almunia sounded optimistic that the EU could strike a deal with Google after the search firm said it would give rivals greater visibility in its results. As they had earlier this year, antitrust regulators again asked more than 100 companies and organizations to comment on the newest proposal.

Most slammed the concessions, with groups such as FairSearch.org and the Initiative for a Competitive Online Marketplace (ICOMP) leading the charge. Both those organizations count Microsoft, which vies with Google in the search market, as a member or major backer.

"Google was offered not one but two unique opportunities to reach an agreement with the Commission and yet their actions show a deep lack of willingness to change their harmful practices," said David Wood, ICOMP's legal counsel, in a statement.

However, Petit didn't think Microsoft's lobbying had played a big part in Almunia's decision to reject Google's second suggested deal. "I don't believe those interest groups have much traction in this debate," Petit said, when asked about FairSearch's and ICOMP's influence. "There are too many other complainants in addition to Microsoft-related ones."

Although Almunia denied that sanctions are inevitable, he said the hourglass is running out. "At this moment, there is little time left, but the ball is still in Google's court," Almunia said last week.

If Google is formally charged, a lengthy process will begin that could result in fines as large as $5 billion.

That's unlikely. Almunia has staked his reputation on reaching settlements with corporations accused of anti-competitive practices, arguing that faster resolutions, not drawn-out legal battles, better serve European consumers, especially in quick-changing technology markets.

Almunia's stance has been very different from his predecessor, Neelie Kroes, who was much more confrontational. Kroes led a years-long action against Microsoft that ended in the American company paying billions in fines for past behavior.

It's time, said Petit, for Almunia to prove that his strategy is viable.

"Almunia has been bragging everywhere about the virtues of settlements, and more generally of fast antitrust enforcement in high-tech markets," said Petit. "He is now bound to make something out of this case before the end of his term."

To do so, however, means he will have to take the Statement of Objections option off the table.

"He won't [file official charges]," said Petit. "If nothing has come in June it will be too late."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Copyright © 2013 IDG Communications, Inc.

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