Fate of Google Deal Now in E.U. Hands

By Molly Moore
Washington Post Foreign Service
Saturday, December 22, 2007

PARIS, Dec. 21 -- European regulators are investigating whether a proposed merger of the Internet search engine Google and the dominant online advertiser DoubleClick would violate competition regulations, even as U.S. authorities approved an American marriage between the two companies Thursday.

The European Commission's "initial market investigation indicated that the proposed merger would raise competition concerns in the markets," the commission said in a statement announcing its recent decision to launch an investigation.

A commission spokeswoman said Friday that she doesn't expect the U.S. decision to affect the European investigation because the probe is centered on the impact on European companies.

Legal experts and others said the 4-1 ruling Thursday by the U.S. Federal Trade Commission could affect the final decision of European investigators, who have until April 2 to issue their findings.

"In general, there is a high rate of converging decisions between Europe and the U.S. concerning transatlantic mergers," said Francois Leveque, a law and economics professor who specializes in antitrust and regulations at Paris' Ecole des Mines. "In 80 percent of the cases, if one side agrees, the other follows."

In some previous cases, however, European regulators have been tougher than the United States on the high-tech industry. In October, Microsoft ceded to E.U. regulators after a decade-long antitrust battle over software that can be run on the Windows operating system. In France, lawmakers earlier this year crafted legislation dubbed the iPod bill forcing compatibility between digital songs and the different machines that play them.

European organizations opposed to the merger said they see major differences between the U.S. and European legislative approaches to data privacy, another major issue in the Google-DoubleClick merger.

"The protection of citizens' personal data is given priority in Europe," based on the principle that "you need to get citizens' consent before using their data, whereas the U.S. tends only to protect citizens from abuse of personal data by government bodies," said an official with one group representing companies opposed to the merger. The person spoke on condition on anonymity because of the organization's position in the case.

The European Commission, comprised of one member from each of the 27 E.U. states, is the executive branch of the European Union and is empowered to enforce laws and regulations.

Google notified the commission of its proposed acquisition of DoubleClick on Sept. 21. After a preliminary review, competition commissioner Neelie Kroes, of the Netherlands, decided in November that members needed more information before voting on the proposed merger and ordered a 90-day investigation into its consequences.

After her team issues its findings, the commission can vote on whether to permit the deal to go through in the European Union.

Following a seven-month review process, the FTC approved the deal, announced in April, without imposing any conditions, arguing that there is sufficient competition in the online ad market.

In a statement outlining its investigation, the European Commission said it would "investigate whether without this [merger], DoubleClick would have grown into an effective competitor of Google in the market for online ad intermediation."

It said it is also examining whether the deal "could lead to anti-competitive restrictions for competitors operating in these markets and thus harm consumers."

Researcher Corinne Gavard contributed to this report.

© 2007 The Washington Post Company