This presentation on the Google shopping case by Joao Vareda, DG Competition, European Commission was made during the discussion “Line of business restrictions and competition concerns” held at the 69th meeting of the OECD Working Party No. 2 on Competition and Regulation on 8 June 2020. More papers and presentations on the topic can be found out at oe.cd/lobr

1. Line of business restrictions:
the Google Shopping case
OECD, 8 June 20201
Joao Vareda
DG Competition, European Commission
speaking in a personal capacity - the views expressed arenot necessarily
those of the EuropeanCommission

2. • More favourable treatment by Google in its
general search results of its own comparison
shopping service (CSS) compared to rivals
• Manifests itself in two ways - two sides of the
same coin:
o Demotion of rival CSSs in Google's general
searchresults (rivals are on the fourth page)
o Google has systematically given prominent
placement to its own CSS: displayed at or near
the top of the general search results with rich
graphical features
2
The Abuse
Competitors
notvisible
Google
Shopping
onthetop
• Link between visibility and format in general search results and users click-through
• Decision does not question the design of the algorithm as such nor rich and prominent display
of shopping results but the fact that Google did not subject its CSS to same treatment as
rivals

3. • Shopping Decision requires Google to bring the infringement effectively to an end
and refrain from any measure that has the same or an equivalent object or effect
• The Decision does not prescribe the precise way in which Google should comply
with this requirement
• However, it specifies that any measure chosen by Google should ensure that
Google treats competing CSS no less favourably than its own CSS within its
general search results pages.
• For example Google should subject Google's CSS to the same underlying processes
and methods for the positioning and display in Google's general search results
pages as those used for competing CSS
3
The Remedy principles

4. • Google Shopping Europe (GSE) was
created for the purposes of the remedy.
This business unit holds separate
accounts to ensure that there is no cross
subsidisation from other Google activities.
• The Shopping Unit was maintained
4
The Remedy
• While before the Shopping Unit included product results selected from a pool of Google
Shopping merchants, now it includes product results from GSE and competing CSSs,
chosen based on the same processes and methods.
• The selection and ranking of product results within the Shopping Unit is based on an
second price auction, including pricing and quality criteria, applied in the same way to
GSE and competitors.

5. • On the one side of the market CSSs
compete with each other to list merchants
• GSE and rival CSSs compete on the basis
of the fees which merchants pay when a
consumer clicks through the link in the
Shopping Unit and lands on the merchant’s
website
• The merchant fees represent the revenues
which CSS derive from their activities
• On the other side, CSSs bid to have their
results displayed in the Shopping Unit
• These bids, which are only payable to
Google if the user subsequently clicks
through, represent the costs which CSSs,
including GSE, incur in order to generate
clicks
5
The Remedy

6. • Monitoring by experts and DG COMP
• GSE never bids more than the corresponding
merchant’s fee, minus a margin, thus covering its
costs (including a share of its fixed cost) - no margin
squeeze or predation
• Displayof Shopping Unit not dependent on whether
product results therein come from GSE or competitors.
• No technical or data advantage detectedfor GSE in
the auction
• Training programmes offered by Google to CSSs on
how to participate in the Shopping Unit
6
Ring Fencing the Remedy
• Specific criteria for the participation in the Shopping Unit auction in order to ensure that
only CSSs offering all features would participate
• Introduction of a CSS tab, with a comparison between CSSs (excluding GSE)

7. • Remedy appears to ensure equal treatment between Google Shopping and rival CSSs
• Created opportunity to CSSs that did not exist before: traffic to rival CSSs increased, thus
increasing their attractiveness vis-à-vis merchants
• However, for some CSSs it does not bring market to the situation before the infringement
• Debate about whether additional provisions can be required which "restore" competition
because of the harm that has been done
• Special advisors report (Cremer et al, 2018):
“where self-preferencing has significantly benefitted a platform’s subsidiary in improving its market
position vis-à-vis competitors, such remedies might include a restitutive element (“restorative”
remedies). In order to enable formerly disadvantaged competitors to regain strength, it may, for
example, be necessary to give them access to the dominant platform’s competitively relevant data
resources or otherwise compensate for their reduced visibility or lack of data access in the past”.
7
Conclusion

8. • Google Android decision: if OEMs wanted to pre-install the Play
Store, they had to also pre-install a range of Google apps, including
Google Search (tying abuse)
• Remedy principle: Licensing Search separately from Play Store
In addition, launching of:
• Search choice screen for all new devices on which Search is pre-
installed
• Shown at setup of device prompting users to select one search
engine from list of four
• Chosen search engine installed on device and become default in
home page search widget and Chrome
• Selection process:
• Technical eligibility criteria (actual searchengine, language)
• Auction among eligible rivals8
Android choice screen

9. Comment to Damien Geradin’s intervention:
New EC tools under consultation
OECD, 8 June 20209
Joao Vareda
DG Competition, European Commission
speaking in a personal capacity - the views expressed arenot necessarily
those of the EuropeanCommission

10. To ensure the contestability and fair functioning of digital and other markets,the Commission
announced a three-pillar structure of complementary and mutually reinforcing measures:
1. Continued vigorous competition law enforcement (including notably the use of
interim measures and more prescriptive/restorative remedies, where appropriate)
2. Consider a new competition tool allowing to deal with structural competitionproblems
that cannot be tackled or addressed in the most effective manner on the basis of Articles
101 and 102 TFEU
3. As announced in the Communication“Shaping Europe’s Digital Future”, the Commission
is also exploring, in the context of the Digital Services Act package, ex ante rules to
ensure that digital markets remain fair and contestable for innovators, businesses and
new market entrants
10
Three-pillar structure

11. Tackling structural competition problems that current
rules cannot tackle at all or cannot tackle in the most
effective manner:
• Structural risks for competition:scenarios where
market characteristics (e.g. network and scale effects,
lack of multi-homing and lock-in effects) and the
conduct of the companies operating in those markets
create a risk for competition.
E.g. tipping markets and unilateral strategies by non-
dominant companies to monopolise a market through
anti-competitive means.
• Structural lack of competition: scenarios where a
market is not working well and not delivering
competitive outcomes due to its structure
E.g. high concentration and entry barriers, consumer
lock-in, lack of access to data or data accumulation, and
oligopolistic market structures.11
New competition tool
Scope
Horizontal
More limited
(e.g. digital)
Basis for
intervention
Market
structure-
based
Dominance-
based
Commonalities
• Allowing imposition of remedies
• Ability to inform/suggest legislative action
• No finding of an infringement
• No damages
• Rights of defence to be preserved
Four policyoptions

12. • Competition law cannot and should not address every issue that can have a market impact. For
example, unfair trading practices and certain recurrent problems going beyond individual
cases are better addressed by well-designed and targeted regulation
• The Commission is thus also assessing the possibility of introducing, in the context of the Digital
Services Act, a new ex ante regulatory framework, which would apply to large online
platforms that benefit from significant network effects and act as gatekeepers
Two policy options:
12
Ex-ante rules on Digital markets
 Adoption of tailor-made remedies addressed to
large online platforms acting as gatekeepers on a
case-by-casebasis where necessary and
justified
E.g. platform-specific non-personal data access
obligations, specific requirements regarding personal
data portability, or interoperability requirements
 Prohibition or restrictionof certain unfair trading
practices by large online platforms acting as
gatekeepers (“blacklisted” practices)
E.g. certain forms of self-preferencing; acceptance of
supplementary commercial conditions that by their
nature have no connection with the underlying
contractual relationship.