Infederation Ltd v Google LLC

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Roth
Judgment Date18 March 2020
Neutral Citation[2020] EWHC 657 (Ch)
Date18 March 2020
Docket NumberCase No: HC-2012-000023

[2020] EWHC 657 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

COMPETITION LIST (ChD)

The Rolls Building

Royal Courts of Justice

London, EC4A 1NL

Before:

Mr Justice Roth

Case No: HC-2012-000023

Between:
Infederation Limited
Claimant
and
(1) Google LLC
(2) Google Ireland Limited
(3) Google UK Limited
Defendants

Ms. Sarah Ford QC and Ms. Charlotte Thomas (instructed by Hausfeld & Co LLP) for the Claimant

Mr. Jon Turner QC and Ms. Julianne Kerr Morrison (instructed by Bristows LLP) for the Defendants

Hearing date: 13 November 2019

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mr Justice Roth Mr Justice Roth

Introduction

1

These are substantial competition law proceedings. Three confidentiality rings (or “clubs”) have been established by orders of this court, giving effect to agreement between the parties: a confidentiality ring, which includes the founding members of the claimant (“Foundem”), Mr and Mrs Raff; an inner confidentiality ring, referred to as the “LEO” [legal eyes only] ring, although that term is misleading as the ring comprises not only external solicitors and counsel but also economic experts; and a still more restricted inner confidentiality ring, referred to as the “RLEO” ring, which presently comprises, on the side of Foundem, 10 named external solicitors and counsel.

2

This is an application by Foundem for admission of an independent expert to the LEO and RLEO rings. Such an application might not normally be controversial. The facts that both sides appeared on this application by leading and junior counsel, and that the extensive argument addressed to the Court took up a full day, show that it is a significant issue which is strongly contested. To understand the reasons and provide a context for the application, it is necessary to describe the nature of the underlying proceedings.

The proceedings

3

Foundem has since January 2006 operated an on-line business providing a “vertical” search engine that allows consumers to compare prices for goods and services offered on third party websites. Foundem alleges that the defendants (“Google”) have abused a dominant position contrary to Article 102 of the Treaty on the Functioning of the European Union (“Article 102”) and the Chapter II Prohibition in section 18 of the Competition Act 1998. The claim was issued in 2012, but some years before Foundem had complained about Google's conduct to the European Commission (“the Commission”), which opened an investigation. That investigation was prolonged, but on 27 June 2017 the Commission finally adopted a decision in Case AT.39740 Google Search (Shopping) (“the Decision”) finding that the first defendant, Google LLC (formerly, Google Inc.), had infringed Article 102 by positioning and displaying more favourably in its general search results pages Google's own comparison shopping service compared to competing comparison shopping services (such as that operated by Foundem). That infringement was found to have commenced, as regards the UK, in January 2008. Google appealed the Decision to the EU General Court and the oral hearing of that appeal has very recently taken place: Case T-612/17 Google and Alphabet v Commission. It is likely to be many months before the General Court delivers its judgment, and it is very possible that there may be a further appeal to the Court of Justice of the European Union.

4

Foundem has made a number of successive amendments to its Particulars of Claim. On 30 October 2018, Foundem served a draft Re-Re-Amended Particulars of Claim (“RRAPOC”), including amendments to take account of the Decision. On 22 February 2019, a revised RRAPOC was served with additional references to the recitals in the Decision. In the light of the Decision, the claim which Foundem seeks to advance has become a “hybrid” claim: in part, it is a follow-on claim relying on the infringement of Article 102 found in the Decision; in part, it is a stand-alone claim alleging further grounds of infringement.

5

The abuse now alleged, or sought to be alleged by the RRAPOC, effectively comprises 10 claims, summarised as follows:

a) “Search Penalty Without Objective Justification”: Between around 27 June 2006 and 1 December 2009, Google applied Algorithm A to Foundem's site without objective justification.

b) “Search Penalty Discrimination”: Google applied Algorithm A without any objective justification to Foundem's vertical search services, but not to Google's own vertical search services and/or Foundem's competitors.

c) “Other Penalties Without Objective Justification”: Google may have applied further penalties to Foundem's site from 26 June 2006 onwards.

d) “Other Penalties Discrimination”: Google applied these other penalties in a manner that discriminated against Foundem's website as compared to Google's own vertical search services.

e) “AdWords Penalty”: Between 1 August 2006 to around 25 September 2007, Google applied a penalty in relation to Foundem's AdWords account without objective justification.

f) “AdWords Penalty Discrimination”: Between 1 August 2006 to around 25 September 2007, Google discriminated against Foundem in the Quality Scores given to Foundem's webpages, as compared to those given to some of Foundem's competitors.

g) “Procedural Abuse”: Google failed to respond to Foundem's requests for algorithmic penalties to be lifted.

h) “Universal Search Abuse”: Google used its Universal Search to give preferential search rankings to Google's comparison shopping services over those of its competitors.

i) “Panda Penalty”: From around April 2011, Google applied its Panda algorithm to Foundem's website, significantly lowering the position of Foundem's website (including its comparison shopping services, and its other vertical search services).

j) “Single Overall Abuse”: further or alternatively, Google's conduct and its effects as set out above were interrelated and together constitute an ‘overall abuse’.

6

Foundem contends that its case, with the exception perhaps of the allegation of procedural abuse in claim (g), concerns a series of inter-related ways in which Google applied various algorithmic penalties or discrimination against its website, along with Google's Universal Search which unjustifiably favoured Google's own comparison websites. However, the Decision found an abuse only in respect of conduct falling within claims (b), (h) and (i), although Foundem seeks to rely on what is said in the Decision to support some of its other claims.

7

Foundem therefore accepts that of these claims, (a), (c), (d), (e), (f), (g) and (j) are stand-alone claims. So also is claim (b) insofar as (1) the discrimination is alleged for the period 27 June 2006-December 2007, (2) it concerns alleged discrimination between Foundem's other (non-shopping) specialised search services and Google's other specialised search services, and (3) it relates to discrimination between Foundem and Foundem's competitors; and claim (i) insofar as it alleges that the Panda penalty was applied to Foundem's other vertical search services. In addition, Google contends that there is a stand-alone element to claim (i) to the extent that it implies that application of the Panda algorithm was not objectively justified. It is unnecessary for the purpose of the present application to determine whether that implication arises under claim (i) and constitutes a stand-alone element.

8

It should be self-evident that most of the claims concern the operation and effect of Google's complex search algorithms. As Ms Ford QC submitted for Foundem, they will therefore involve evidence of a highly technical nature.

9

It has been common ground for some time that the present action cannot proceed to trial before the EU proceedings are concluded (unless perhaps any further appeal is restricted to the question of penalty). However, the proceedings in this court are not stayed and various steps may be taken in the meantime. So far, some limited disclosure has taken place.

Google's pending application

10

On 17 May 2019, Foundem applied for permission to make the further amendments to its pleading as set out in the RRAPOC. Many of those draft amendments are not opposed, in particular insofar as they plead the contents of the Decision. However, in response, Google issued an application on 18 July 2019 directed at the pleaded stand-alone claims. Google's application seeks to strike out, pursuant to CPR rule 3.4(2)(a), those parts of the existing Foundem pleading that advance the stand-alone claims as disclosing no reasonable grounds for bringing those claims; alternatively, it seeks ‘reverse’ summary judgement on those claims. On the same basis, Google opposes Foundem's application to amend insofar as it relates to the stand-alone claims.

11

Google also seeks to have the second and third defendants removed as parties, but that is not material to the present application.

12

Google's strike out/summary judgment application (“Google's pending application”) notes that many of the stand-alone claims had also been the subject of Foundem's complaint to the Commission, but the Commission did not take them forward; and it asserts that insofar as those claims were not raised with the Commission, they are speculative and without foundation. However, it is well established, and Google accepts, that there is no legal impediment under EU law to a claimant in a private action alleging an infringement which goes beyond the scope of an infringement found by the Commission. While Google relies in support of its application on various statements made by the Commission as persuasive, it does not suggest that they are binding on this court. The fundamental basis of its application is stated to be that “[t]here is no...

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