Online search advertising restrictions and competition law: some recent lessons

The growth of e-commerce over the last decade has had a significant impact on most if not all retail markets.

Trends like the increased importance of online sales, price transparency and the emergence of new market players such as online platforms significantly affected the distribution and pricing strategies of both manufacturers and retailers, not only in relation to inter-brand but also intra-brand competition. It translated into novel forms of restrictions, such as bidding restrictions in online search advertising. For example, distributors are restricted in the use of brand names and trademarks of its suppliers or competitors agree with each to no longer bid on each other’s brand names. From a business perceptive, it might seem legitimate to agree upon such restrictions, e.g. to lower the advertisement costs. However, recent developments show that such restrictions might be anti-competitive and thus illegal under EU (and Dutch) competition law.

These developments include the fine imposed by the European Commission on Guess or the 1-800 Contacts case in the U.S. However, also the Dutch ACM is clearly interested in bidding restrictions. On 7 June 2019, the ACM published a working paper on the economic effects of online search advertisement bidding restrictions. In particularly as regards the Dutch hotel sector. In the Netherlands, apparently, many hotel chains make arrangements with booking websites not to advertise on search results for their brand names. Interestingly, the hotel sector in the U.S. is already under investigation for violation of the antitrust laws by manipulation of search advertising on Google.

Pauline Kuipers and Mariska van de Sanden recently published a post on the Kluwer Competition Law Blog about these developments. In this post they discuss:

• Why undertakings would want to impose restrictions as regards online search advertising in the first place
• What recent developments have taken place
• Which conclusions can be drawn on the basis of these developments, and
• What to look out for in the future when it comes to online search advertising restrictions