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Court Dismisses ACCC Allegations Against Google

Issued: September 01 2011

Australia’s Federal Court has dismissed allegations by the Australian Competition and Consumer Commission (ACCC) that internet search engine Google engaged in practices likely to mislead consumers.

The ACCC alleged that by failing to adequately distinguish advertisements from search results, Google had engaged in misleading or deceptive conduct. Justice John Nicholas found that the use of the word “advertisement” or an abbreviation of that word, rather than “sponsored links,” might eliminate or reduce confusion in the minds of some users.

However he held that the presentation of Google’s search results did not breach consumer law as most users would have appreciated that “sponsored links” were in fact advertisements.

Since the ACCC instituted the proceedings, Google has changed the description of its advertisements on its search results pages from “Sponsored Links” to “Ads.”

The ACCC was the first regulatory body to seek legal clarification of Google’s conduct from a trade practices perspective, the commission said in a statement. Google has also been scrutinized over trademark use in the United States, France and Belgium, and has faced scrutiny overseas, particularly in the European Union, in relation to competition issues concerning its search results business.

The ACCC also alleged, and Nicholas found, that the publication of a number of advertisements on Google’s search results page in which the headline of the advertisement comprised the business name, product name or web address of a business not sponsored, affiliated or associated with the advertiser was misleading or deceptive. Trading Post, as responsible for some of the advertisements, was found to have made false or misleading representations and engaged in misleading or deceptive conduct.

The ACCC alleged that as a result of Google’s significant input into advertisements which appear on its search results pages, it was not only the advertiser but also Google which made the representations found to have breached the Act. However, Nicholas found that Google was “merely communicating” the representations without adopting or endorsing any of them.

“This case is important in relation to clarifying advertising practices in the internet age,” ACCC Chairman Rod Sims said. “All businesses involved in placing advertisements on search engines must take care not to mislead or deceive consumers.”

The ACCC also noted that on the first day of the hearing, March 8, 2010, Google released a “Business Names Policy” which prohibited advertisers’ use of unrelated business names in the first line of ad text, when they are using that name to imply a special relationship with any unrelated third party. This policy was initially applied by Google in Australia and New Zealand only but was expanded to apply to all countries in mid-July 2010.

Corrs Chambers Westgarth advised the ACCC. Gilbert + Tobin advised Google, and Mallesons Stephen Jaques advised Trading Post Australia, the first respondent.

Communications Authority Plans Digital Dividend Spectrum Sale
The Australian Communications and Media Authority (ACMA) has announced it will use a Combinatorial Clock Auction format for the sale of digital dividend spectrum.

“The Combinatorial Clock Auction, otherwise known as CCA, has already been used successfully overseas and is the methodology most likely to produce an efficient allocation of spectrum,” said ACMA Chairman, Chris Chapman.

The CCA is an auction method used to sell multiple items in a single auction process. It will allow bidders to bid on packages of spectrum in both the 700 MHz and 2.5 GHz bands, offering them the opportunity very importantly to acquire the specific combinations of spectrum which best meet their business needs.

The CCA is well suited to auctions where the value of an individual lot to a bidder depends significantly on what other lots that bidder can acquire. The winning bidders then are those that make the highest value combination of bids, the ACMA said in a statement.

“This decision paves the way for a successful auction, which is expected to take place in late 2012,” said Chapman.

Digital dividend spectrum includes spectrum that will be auctioned in the 700 MHz and 2.5 GHz bands. This auction is part of the ACMA’s strategy to address exponential demand for spectrum for wireless broadband and provide an opportunity to bring new services to the Australian market – such as 4th generation (4G) mobile services.

The ACMA will hold a Digital Dividend Auction Tune-Up on November 4, 2011. This event will provide potential auction participants with an opportunity to hear about the ACMA’s work on preparing for the auction, including its development of the detailed CCA auction rules. For more information about the tune up, email

US Medical Device Company Launches ASX Listing
DLA Piper has advised US-based medical device company GI Dynamics on its initial public offering (IPO), US private placement and listing on the Australian Securities Exchange (ASX). With a market capitalization of about US$304 million, GI Dynamics represents the largest float in Australia this year.

GI Dynamics raised AUS$80 million through its successful offers and is using the funds to expand the global commercialization of its flagship Type 2 diabetes and obesity treatment product EndoBarrier, which is a non-surgical product which mimics the effect of gastric bypass surgery.

The firm acted as the Australian legal advisor to GI Dynamics in the preparation and launch of the IPO and listing on the ASX, advising across corporate, tax and intellectual property matters. The DLA Piper Australia team was led by David Morris, joint head of corporate-Asia Pacific, and corporate partner Catherine Merity; intellectual property and technology partner Alec Christie advised on the deal.


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