Google had challenged a $91-billion fine it would have to pay if Canada's Competition Tribunal sides with the country's competition watchdog.Michel Euler/The Associated Press
Google GOOGL-Q has suffered a setback in its fight against the country’s competition watchdog.
The Competition Tribunal dismissed this week a constitutional challenge from Google, which has been accused of causing harm through its hold on the online advertising world.
Constitutional challenges question acts that could violate someone’s rights or freedoms and often end up being precedent-setting.
In this case, Google’s failed challenge took aim at a monetary penalty the company would have to pay, if the tribunal eventually sides with the Competition Bureau, which alleges the tech firm abused its dominant position in online advertising.
The penalty the bureau is proposing would either be three times the value of the benefit derived from Google’s allegedly anticompetitive practices or, “if that amount cannot be reasonably determined,” three per cent of Google’s annual worldwide gross revenues.
Google said that could leave it paying up to $91-billion – a sum it described as “shocking, gargantuan” and “unprecedented in Canadian history” because it is hundreds of times larger than the biggest criminal fines ever imposed.
Google also argued the fine is so big that it would violate the company’s constitutional rights because it’s akin to a “true penal consequence” – a punishment more in line with how criminal offences are treated.
The Competition Bureau fought back, saying Google’s charter rights had not been breached and the tribunal has no jurisdiction to issue a fine that qualifies as a true penal consequence.
Judge Andrew Little ultimately took the bureau’s side.
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In his order dismissing Google’s challenge, he said the fine the company could face is “hypothetical at best.” While he conceded that it could be “very large,” he said those kinds of charges “may be necessary to deter non-compliance.”
When asked about Little’s decision, Google provided the same statement it gave The Canadian Press in November, when it was sued by the bureau. That statement, from vice-president of global ads Dan Taylor, said the bureau’s complaint “ignores the intense competition where ad buyers and sellers have plenty of choice.”
Meanwhile, acting commissioner of competition Jeanne Pratt said staff at the bureau “welcome” Little’s decision.
“We continue to stand by our investigative findings that, through its anticompetitive conduct, Google has been able to entrench its dominance, prevent rivals from competing, inhibit innovation, inflate advertising costs and reduce publishers’ revenues,” Pratt said.
The bureau’s case against Google began under Pratt’s predecessor Matthew Boswell in November. He filed a lawsuit claiming Google unlawfully tied together its ad tech tools – DoubleClick for Publishers, AdX, Display & Video 360 and Google Ad – to maintain its market dominance.
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Boswell and the bureau estimated the tools that help manage ad inventory, facilitate purchases or act as an intermediary between buyers and sellers gave Google a market share of 90 per cent in publisher ad servers. They believe the company controls 70 per cent of advertiser networks, 60 per cent in demand-side platforms and 50 per cent in ad exchanges.
To mitigate the issues that stem from this dominance, the bureau wants the tribunal to order Google to sell its publisher ad server, DoubleClick for Publishers, and its ad exchange, AdX.
Keldon Bester, executive director of think tank Canadian Anti-Monopoly Project, saw Little’s decision as not just advancing the bureau’s fight but also reaffirming competition law and reassuring consumers and businesses that depend on fair and open markets.
Had higher monetary penalties been deemed unconstitutional, Canada would not be able to levy meaningful financial penalties for anticompetitive conduct going forward, he said.