EC Clears Google’s Acquisition of DoubleClick

This posting was written by John W. Arden.

Google’s proposed acquisition of Internet advertising server DoubleClick, Inc. did not impede effective competition within the European Economic Area or a significant part, according to a March 11 announcement by the European Commission.

An in-depth investigation initiated by the Commission in November 2007 found that the transaction would be unlikely to have harmful effects on consumers, in either ad serving or intermediation in online advertising markets within the European Economic Area or a significant part of it.

Google, a leading Internet search engine provider, offers online advertising space on its sites and provides intermediation services to Internet publishers and advertisers for the sale of online advertising space on partner websites through its “AdSense” network.

DoubleClick sells ad serving, management, and reporting technology to website publishers and to advertisers and ad agencies. “Such technology allows Internet publishers and advertisers to ensure that advertisements are posted on the relevant websites and to report on the performance of such advertisements,” the EC noted.

Competitors?

The Commission’s market investigation concluded that Google and DoubleClick could not be considered competitors because they were not exerting major competitive constraints on each other’s activities.

Even if DoubleClick could become an effective in online intermediation services, it was likely that other competitors would continue to exert sufficient competitive pressure after the merger. Therefore, the elimination of DoubleClick as a potential competitor would not have an adverse impact on competition in the online intermediation advertising services market.

Non-Horizontal Relationships

Third parties raised concerns about potential effects of non-horizontal relationships between Google and DoubleClick in the ad serving market. These concerns included (1) whether Google’s control of DoubleClick’s ad serving tools could raise the cost of ad serving for rival intermediaries and (2) whether Google could require purchasers of search advertising space or intermediation to purchase DoubleClick’s tools.

However, the merged entity would not have the ability to engage in strategies aimed at marginalizing Google’s competitors because of the presence of credible ad serving alternatives to which customers could switch, such as Microsoft, Yahoo!, and AOL, according to the EC.

A press release on the EC decision appears here at the Europa web site.

FTC Investigation

The EC’s clearance of the transaction followed the FTC’s decision to close its own eight-month antitrust investigation into the acquistion on December 20, 2007.