By Tom Fairless in Brussels and Alistair Barr in San Francisco
Europe's competition regulator is preparing to move against
Google Inc. in the next few weeks, a person familiar with the
matter said Wednesday, setting the stage for charges against the
U.S. Internet-search giant in a five-year-old investigation that
has stalled three times and sparked a political firestorm.
The European Commission, the European Union's top antitrust
authority, has been asking companies that filed complaints against
Google for permission to publish some information they previously
submitted confidentially, according to several people familiar with
the requests. Shopping, local and travel companies are among those
that have been contacted, one of those people said.
Antitrust experts said the requests were a strong indication
that formal antitrust charges were being prepared.
A decision to file charges against Google would kick off the
EU's highest-profile antitrust suit since its lengthy campaign that
started a decade ago against Microsoft Corp., which paid the bloc
EUR1.7 billion ($1.8 billion) in fines through 2012.
A settlement in Google's case is always possible. Even if the EU
presses ahead with charges, Google could still strike a deal to
resolve the bloc's concerns that the company abuses its dominance
in the European search market.
In addition to search, the commission has been investigating
whether Google has been "scraping" content from rivals' sites, and
unfairly restricting advertisers and software developers who do
business with the search giant. A draft conclusion prepared in
March 2013 by the European Commission took the "preliminary view"
that Google was abusing its dominant position in all four
areas.
Google has denied any anticompetitive behavior. Speaking in
Berlin last week, Kent Walker, its general counsel, pointed to a
"painfully long list of unsuccessful Google products," including
Google+ and Street View in Germany, as evidence that competition
laws were working.
Margrethe Vestager, the EU's new antitrust chief, has made
several statements suggesting that she prefers the legal certainty
of formal charges in competition cases over negotiated settlements.
Ms. Vestager "is planning to move the case forward in a relatively
short time frame," said a person familiar with the matter.
Ms. Vestager's predecessor as antitrust chief, JoaquĆn Almunia,
tried and failed three times to reach a settlement with Google,
most recently last year. Mr. Almunia considered a settlement better
suited to the fast-moving Internet landscape.
The third failure followed fierce criticism of the proposed deal
from various companies, including German publisher Axel Springer SE
and News Corp, publisher of The Wall Street Journal. They
complained Google's search systematically drove users to Google's
own sites.
Google and the commission haven't had recent settlement
negotiations, according to a person familiar with the matter.
The regulator is moving quickly. The first requests to
complainants for unredacted documents came in late February, and
most required a response in a few days, people familiar with the
matter said. One company was contacted March 26 and had until
Thursday to respond, one of the people said. Another was asked for
clearance to use documentation of meetings and phone interviews in
late 2012 telling staffers about changes Google made to its Google
Shopping search service, one of the people said.
"The fact that the commission has been seeking fuller
[information] from complainants, against short deadlines [of] a
couple of days, shows it is in the final stages of getting a
statement of objections together," said one Brussels-based lawyer
representing a Google rival in the case. "It's part of the
choreography you always see."
The EU's investigation of complaints that Google abuses its
dominance of the online search market to hurt rivals began in 2010.
Google handles more than 90% of Web searches in Europe, much higher
than its share of the U.S. search market.
Comparison-shopping sites say that when consumers use Google to
search for products online, Google features results from Google
Shopping prominently and relegates products from rival sites to
positions lower down the search page, where they might not be
seen.
Experts say the legal hurdles to building an antitrust case in
Europe are lower than in the U.S., where antitrust investigators
have to prove their case to a judge. In the EU, the commission acts
as prosecutor, judge and jury in competition cases. Appeals are
heard by EU judges in Luxembourg who have rarely overturned major
decisions made by Brussels.
If the commission were to file charges, Google would have about
three months to make a case that its actions don't violate EU
law--or it could propose another settlement that would address the
charges. It also could request a hearing to argue its case more
fully before the commission. After assessing Google's case, the
regulator would issue its final decision--which could then be
appealed to the Luxembourg courts.
If the commission found against Google, it could by law fine the
company as much as 10% of its annual revenue, which totaled $66
billion last year.
Ms. Vestager has indicated repeatedly that she favors a formal
court process to establish a legal precedent. Settlements "should
not be a habit," and should not be sought "at any price," she said
at an event in Brussels last month. Citizens and companies "should
see that we are willing to go to court if that is the right thing
to do," she said.
Ms. Vestager met a month ago with Eric Schmidt, Google's
executive chairman. It was the first time she had met with a top
Google executive since taking office on Nov. 1.
Last week, she indicated thather priority was to ensure that
smaller Internet firms could compete with the industry's
giants.
The latest settlement proposed by Mr. Almunia fell apart
following a series of interventions by powerful political players,
including a letter from the economy ministers of France and Germany
calling for greater concessions from Google, and protests from
German publishing houses.
In November the European Parliament passed a resolution calling
for a possible breakup of Google, brushing aside an unusual series
of objections from the U.S. Congress that the move risked
politicizing an antitrust investigation.
Sam Schechner contributed to this article.
Write to Tom Fairless at tom.fairless@wsj.com
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