Keyword-bidding collusion back in the spotlight

Two separate investigations announced today – one by the Swiss Competition Commission (ComCo) and one by the European Commission –  have put restrictive practices around keyword-bidding back in the spotlight: an area where competition authorities across Europe have long taken a firm line.

Keyword-bidding is the process by which companies bid to have their advertisements displayed alongside the search results when a user searches for particular keywords.

ComCo has confirmed that it has opened two investigations into such conduct – one into three companies offering package tours in Switzerland, and the second into almost all the online casinos in Switzerland. The conduct in question was self-reported to ComCo by certain of the companies involved, who allege that participants agreed to refrain from bidding on certain keywords related to competing brands. ComCo considers that this could have harmed competition and consumers, by making it more difficult to compare competing products. According to press reports, the European Commission has confirmed it is also investigating similar concerns in the travel sector.

The fact that such practices may still be occurring is noteworthy given this is well-trodden ground under competition law. Practices restricting keyword-bidding have been scrutinised by a number of national competition authorities in Europe in the past, as well as by the European Commission in its investigation into the clothing brand Guess, which saw it impose a fine of almost €40 million on Guess in 2018 (as reported in our briefing). Among the practices the Commission found to be anti-competitive in that case were restrictions Guess imposed on its authorised distributors, preventing them from bidding on the Guess brand name and associated trademarks on Google AdWords. The Commission took the view that this was a restriction of competition by object. This was later reflected in the Commission’s 2022 update to its Vertical Agreements Block Exemption Regulation and Vertical Agreements Guidelines, which now explicitly list as a hardcore restriction any obligation preventing the effective use of the internet as a sales channel by the buyer, including obligations not to use the supplier’s trademarks or brand names for bidding in search engines. 

Whereas many of the previous decisions and guidance in Europe have involved vertical agreements between suppliers and their distributors, the most recent investigations relate to horizontal agreements between competitors. The conduct in question is therefore likely to be characterised as a market-sharing or bid-rigging cartel – classically among the most serious competition law infringements, meaning that any potential penalties could be more significant than those seen in previous cases. 

These latest investigations make clear that restrictions on keyword-bidding remain firmly in the crosshairs for competition authorities. Businesses should review whether they have any formal or informal understandings with their competitors or distributors which restrict bidding for search terms and which may be considered anti-competitive. Where potential issues are identified, businesses should seek early legal advice.