Tag Archive | "Antitrust"

Source: CNBC

The Impact of the European Union on American Businesses: Google Fined for Antitrust Violations

Source: CNBC

Source: CNBC

In March, the European Commission fined Google LLC and its parent company, Alphabet Inc. (Google), €1.49 billion (which equals almost $1.7 billion) for abusive online advertising practices that broke the European Union’s (EU) antitrust rules.[1] Google’s practices prevented or limited its rivals from working with companies that were doing business with Google and shielded Google from competitive pressure. This is the third multi-billion dollar penalty the EU has recently laid on Google.[2]

Google’s as Online Search Advertising Brooker

When a consumer conducts a search through a search function that is embedded in another website, the website delivers search results as well as search adverts which appear alongside the search results. Google provides these search adverts through its program AdSense for Search (AdSense) and acts itself as intermediary between the advertisers and the website owners. For years, AdSense contracts gave Google a wide range of control over the adverts.[3]

European Commission

Source: European Commission

EU Antitrust Rules and the European Commission’s Decision

EU antitrust policy is developed from two central rules set out in the Treaty on the Functioning of the European Union (TFEU).[4] The first rule is article 101 TFEU which prohibits agreements between independent market operators that restrict competition. The second rule is article 102 TFEU which prohibits market participants that hold a dominant position on a given market to abuse that position. The European Commission is empowered to apply these rules and impose fines.[5] It has done so with its decision finding that Google has abused its market dominance by preventing rivals from competing in the online search advertising intermediation market.

Google Antitrust Threads in the US

Although one of the most significant characteristics of the new antitrust approach in the United States has been the increased focus on innovative companies in high-tech industries,[6] the most serious antitrust thread Google faced in the United States was an investigation without penalties conducted in 2013 by the Federal Trade Commission.[7]

Conclusion

The EU is one of the largest partners of the United States,[8] and it appears that the EU is increasingly setting standards that American companies must meet to remain competitive in the global marketplace: As a result of the fines by the European Commission, Google has changed how it does business.[9] Given the tendency of the EU to generally attribute a higher priority to protection of consumer rights and the minimization of free-market distortions resulting from monopolies or unfair trade practices, the increased impact of EU regulations may be welcomed by many consumers.

Julia Robert is the incoming Executive Editor  for the Denver Journal of International Law and Policy and a 2L at the University of Denver – Sturm College of Law.

[1]European Commission Press Release IP/19/1770, Antitrust: Commission fines Google €1.49 billion for abusive practices in online advertising (Mar. 3, 2019).

[2]European Commission Press Release IP/18/4581, Antitrust: Commission fines Google €4.34 billion for illegal practices regarding Android mobile devices to strengthen dominance of Google’s search engine (July 18, 2018); Commission Press Release IP/17/1784, Antitrust: Commission fines Google €2.42 billion for abusing dominance as search engine by giving illegal advantage to own comparison shopping service (June 27, 2017).

[3]For details, see European Commission Press Release IP/19/1770, supra note 1.

[4]Consolidated Version of the Treaty on the Functioning of the European Union, Oct. 10, 2012, 2012 O.J. (C 326) 47 [hereinafter TFEU].

[5]TFEU, supra note 4 at art. 105.

[6]Geoffrey A. Manne & Joshua D. Wright, Google and the Limits of Antitrust: The Case Against the Case Against Google, 34 Harv. J. L. & Pub. Pol’y 171, 173 (2011).

[7]Federal Trade Commission, Press Release, Google Agrees to Change Its Business Practices to Resolve FTC Competition Concerns In the Markets for Devices Like Smart Phones, Games and Tablets, and in Online Search, https://www.ftc.gov/news-events/press-releases/2013/01/google-agrees-change-its-business-practices-resolve-ftc (Jan. 3, 2013).

[8]Countries and Regions, United States, European Commission, http://ec.europa.eu/trade/policy/countries-and-regions/countries/united-states/ (last updated Apr. 15, 2019).

[9]EU Fines Google $1.7 Billion Over ‘Abusive’ Online Ad Strategies, NPR(Mar. 20, 2019, 1:25 PM), https://www.npr.org/2019/03/20/705106450/eu-fines-google-1-7-billion-over-abusive-online-ad-strategies.

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Guate_thumb

Critical Analysis: Guatemalan Markets: Dominated by Monopolies

Cementos Progreso Plant located in San Miguel, Sanarate, El Progreso. It is the largest cement production plant in the country. Source: Guate360

Cementos Progreso Plant located in San Miguel, Sanarate, El Progreso. It is the largest cement production plant in the country. Source: Guate360

Although laws discussing the country’s disfavor for monopolies exist in Guatemala, the lack of enforcement and compliance with these laws has engendered a market riddled with monopolies and oligopolies.  Essentially, there is no antitrust, or “leyes de la competencia,” legislation currently in effect in the country, which turns the current laws into mere words without any real-life impact.  As such, there are only a select number of high-power families that control virtually the entire Guatemalan market in various commodities.

There are several sources of laws in Guatemala discussing the country’s opposition to the existence of monopolies in the market.  Article 130 of the Constitution of the Republic of Guatemala prohibits the existence of monopolies in the Guatemalan market.  This Article states that Guatemala will limit the functioning of the companies that absorb or intend to absorb, with prejudice to the national economy, the production in an industrial branch, farming, or commercial activity.  However, the utopian ideal of having a market without monopolies does not exist in Guatemala.

Another legislative attempt to prohibit monopolies is found in Guatemala’s Penal Code.  Article 340 pronounces that a company operating as a monopoly is a crime.  The main problem with these existing laws is that they are reactive and reparative, rather than being proactive and preventative.  This is the opposite of existing legislation in the United States, such as the Sherman Act, Clayton Act, and the Federal Trade Commission Act, all of which take preventative measures to ensure competitive practices and that monopolies never take over the market.

One of the reasons why antitrust legislation is not in force in Guatemala is due to the overwhelming power of the select group of wealthy families that control the country’s largest companies.  As a group, these families constitute a unique type of economic oligarchy that dominates many of the main and essential sectors of the market.  Between these families there is an unspoken pact that is called a “Pacto de Caballeros” in Spanish.  This pact signifies the understanding between the parties that, as translated from Spanish, “a dog doesn’t eat a dog,” meaning that each family can control their own economic sector of the market without any interference from any of the other powerful families.  It is easy to see that these families are not in favor of the adoption of an antitrust law in Guatemala, as this would destroy their untouched control of the market.

There are several examples of high-power families that control essential sectors of the market in Guatemala.  The Castillo family owns Cervecería Centro Americana, a brewery that dominates nearly 90% of the beer market.  The Gutiérrez family enjoys a monopoly over essential staples such as flour, oil, and chicken, which led to the creation of Pollos Camperos, a restaurant chain that essentially allows the family to preside over the distribution of the food they control.  Another indicative example is the Novella family, who owns Cementos Progreso, a cement company that controls the entire Guatemalan market in this commodity.  Due to the lack of enforcement of antitrust legislation, these families have commanded the markets of their respective products for decades.

Without a more rigid system of enforcement and mandatory compliance by the dominant companies, Guatemala’s marketplace will continue to be an oppressive one that does not encourage competition and as a result prohibits the country from participating and competing successfully on a global scale.

Laura Brodie is a 2L and a Staff Editor on the Denver Journal of International Law and Policy.

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