GOOG Alphabet Inc

By Daniel Michaels 

BRUSSELS -- Fining Google $5 billion is one thing, making it stick is another.

Google parent Alphabet Inc. said within hours Wednesday it would appeal the European Union antitrust fine for abusing the dominance of its Android operating system.

The company faces an uphill battle with its appeal -- but maybe not an insurmountable one, say lawyers and legal scholars, citing a court ruling involving Intel Corp. last year.

The European Commission, the EU's executive arm that brought the case, usually wins such appeals -- European law gives it a strong hand, courts tend to defer to it and its cases are painstakingly built over months or years.

Following an embarrassing string of losses on appeals of merger cases in the previous decade, the commission in 2004 improved its economic analysis of deals and increased the rigor of its arguments, say former competition officials and lawyers. Since then, almost no commission competition ruling has been rejected.

"The commission's track record is formidable," said Assimakis Komninos, a competition lawyer at White & Case in Brussels.

Its record is particularly strong in the type of case brought against Google, abuse of dominance. Google is accused of stifling competition by forcing handset makers to bundle its apps with Android, which it offers free.

EU law places a particular onus on companies that dominate a sector and tries to promote competition even if only potential harm can be shown, said Ioannis Lianos, a professor of global competition law at University College London. The approach contrasts with U.S. law and its enforcers, which focuses on demonstrated harm over market structure.

Of 15 appeals to abuse-of-dominance cases from 2000 to 2016, the commission won 11 outright and faced partial annulment in four, Mr. Komninos said.

However, that could change following a decision in September by the European Court of Justice, the EU's highest court, to send back to a lower court a 2009 ruling by the commission against Intel. ECJ judges faulted the lower court's assessment of commission analysis of Intel's sales practices. The commission had fined Intel EUR1.06 billion over loyalty rebates to customers.

A review by the lower court is unlikely before next year. It could still side with the commission or fault it narrowly. But observers see the case as a rare opening for legal challenges.

"Until a few years ago, I would have said that Google's chances on appeal are not high because of courts' deference" to the commission, said Michael Carrier, a professor at Rutgers Law School who specializes in antitrust law. The economics-centered approach ordered by the ECJ in the Intel case "could help Google" undermine the commission's case against it, he said.

It could also help Google's appeal of the commission's $2.7 billion fine imposed last year on its web-shopping service, and a $1.23 billion fine levied in January against Qualcomm Inc., lawyers say.

The commission's hand has been so strong in competition cases that some accused companies settle cases rather than appealing them, say lawyers in Brussels. One senior EU judge last year noted a drop since 2010 in the number of appeals filed and urged companies not to hold back.

Aggressive appeals of merger cases from the 1990s and subsequent commission losses improved the quality of its rulings, say attorneys.

Antitrust enforcers were humbled by judges on some of their most high-profile cases, including the rejection in 2001 of General Electric Co.'s proposed purchase of Honeywell International. The companies appealed and in 2005 an EU court upheld the prohibition but only on a technicality. The commission's central grounds for rejecting the deal was "vitiated by a manifest error of assessment," the court ruled.

Write to Daniel Michaels at daniel.michaels@wsj.com

(END) Dow Jones Newswires

July 19, 2018 11:42 ET (15:42 GMT)

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