04 December 2015

Paris Court of Appeal dismisses a damages claim against Google based on alleged predatory pricing

Further to proceedings brought by a French mapping provider, Bottin Cartographes, now known as Evermaps, the Paris Commercial Court (the Commercial Court) stated on 31 January 2012 that by not charging a fee for its mapping products Google Inc. (Google) was pricing the products below cost and thus abusing its dominant position in the market of online mapping tools. It ordered Google to pay €500,000 damages to Bottin Cartographes.

Google appealed this decision before the Paris Court of Appeal (the Court of Appeal) which, in compliance with the French Commercial Code, sought advice from the French Competition Authority (the FCA) regarding the potential existence of a predatory pricing practice from Google in the relevant market.

Following the FCA’s opinion, the Court of Appeal ruled that Google’s pricing policy could not be considered as predatory. It was held that, although some of Google’s mapping products were free, income from sources such as advertising should be taken into account. This approach meant that all except two of the costs tests carried out demonstrated that the income generated from Google’s online mapping tools fully covered costs, including those generated by the free version.

The two tests showing that Google's prices were potentially questionable did establish that incomes generated by its online mapping tools were below long-run average incremental costs but above average avoidable costs. However, the Court of Appeal found that Google did not have the intention of forcing competitors out of the relevant market and that, in any case, did not have the ability to do so given the strong competition on the market.

The Court of Appeal therefore overruled the Commercial Court's judgment.

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