Filenews 15 September 2024 - by Michalis Paraskevas
The tech industries, and especially giants such as Google, Amazon, Apple and Meta (formerly Facebook), have gained enormous influence and economic power.
This power allows them to influence markets, governments and the lives of consumers globally. However, with the increase in their strength comes the need for increased regulation and control.
The European Union, recognizing this need, has shown consistency in regulating the operation of technology giants within the EU market.
Competition law regulation against monopolistic practices, as well as Digital Markets Act (DMA), are examples of legislative initiatives aimed at preventing the abuse of power by big tech companies. The aim is to ensure equality of competition and consumer protection.
The decision on Apple
Based on these policies, the General Court of the EU (Grand Chamber) issued two very important judgments on 10/9/2024, which are essentially very big victories for the EU itself and its institutions, especially in terms of competition law, against the tech giants Apple and Google, in separate legal battles in which billions of euros are at stake.
Concluding a long-running legal battle, the European Union's Supreme Court has ruled that Apple is now obliged and must pay €13 billion in retroactive taxes to Ireland, which Ireland is obliged to recover without being able to waive them!
Essentially, Ireland acts as a tax haven for Apple to have an incentive to be based there, because according to the European Commission's calculations, Dublin allowed Apple to pay a tax rate of just one percent on its European profits in 2003, which was then reduced to 0.005 percent in 2014!
It was one of many investigations over the past decade into "friendship" tax arrangements between large companies and several EU countries.
Apple even had the upper hand in the Ireland case in 2020, when the General Court of the EU acting as a first instance court in this process annulled the order to pay the taxes owed, and it is this decision that the European Commission appealed.
Finally, on 10/9/2024, the Court, in its final judgment in the case, confirms the Commission's 2016 decision that Ireland provided unlawful aid to Apple, which it is obliged to recover.
The decision on Google
Minutes after the ruling against Apple, the General Court of the EU issued another very important ruling, against another tech giant for upholding a fine of €2.4 billion imposed by the European Commission against Google.
The Court dismissed the substantive appeal of Google and its parent company Alphabet against the fine imposed on the search engine in 2017 for abusing its dominant position by favouring its own comparison shopping service.
In 2017, the European Commission fined Google around €2.4 billion for having abused its dominant position on several national internet search markets by favouring its comparison shopping service over competing services.
The Commission concluded that Google had abused its dominant position on the market for general internet search services and niche search services and imposed a fine of €2,424,495,000 on it and that Alphabet was held jointly and severally liable, as Google's sole shareholder, for the payment of €523,518,000. Google and Alphabet challenged the Commission's decision before the General Court of the European Union.
By judgment of 10 November 2021, the General Court of the EU dismissed the main part of the action and, in particular, upheld the fine.
By contrast, the General Court held that it had not been established that Google's practice had anticompetitive effects, even potentially, on the general search market.
It therefore annulled the Commission's decision in so far as it had found an infringement of the prohibition on abuse of a dominant position also in respect of the market in question.
Google and Alphabet then brought an appeal on a point of law before the Court of Justice seeking the annulment of the judgment of the General Court, in so far as it dismissed their action, and the annulment of the Commission's decision.
The General Court of the EU, in its judgment of 10/9/2024, dismissed the appeal and consequently upheld the judgment of the General Court.
Dominance and abuse
However, it is important to stress that the Court of Justice of the EU has ruled that EU law provides for sanctions not for the very existence of a dominant position, but solely for its abuse, and in particular for conduct by undertakings in a dominant position which restricts fair competition and which is therefore liable to cause harm to individual businesses and consumers.
Such conduct includes conduct which, through the use of means other than those governing fair competition between undertakings, has the effect of hindering the maintenance of existing competition or its development on a market where, precisely because of the presence of one or more dominant undertakings, competition is already weakened.
The Court states that it cannot be considered, in general, that an undertaking in a dominant position which treats its goods or services more favourably than it treats the goods or services of its competitors adopts, irrespective of the circumstances of the individual case, conduct which deviates from fair competition.
However, the Court finds that, in the present case, the General Court was right to find that, having regard to the characteristics of the market and the specific circumstances referred to above, Google's conduct was discriminatory and did not fall within the framework of fair competition.
The fine on Google and the imposition on Apple to pay billions in taxes in Ireland is a strong signal that companies that break competition rules will face serious consequences.
* Advocates-Legal Consultants
