Legal Limbo Could Last 12 Months Or More

Could Be Year Or More...

IT could be more than a year before the sensational legal action brought by the Australian Competition and Consumer Commission against Google and Trading Post actually gets tested in court.

The ACCC alleges the companies engaged in "misleading and deceptive conduct" during a Trading Post campaign on Google AdWords designed to take business from competitor websites.

While the matter has been listed for a directions hearing in the Federal Court on August 21, this is merely expected to set the terms of engagement - legal experts say the real legal battle will not occur until the second half of next year.

Google has promised to "vigorously defend" the ACCC's allegations, which would have global ramifications if proved upheld.

The ACCC alleges that Trading Post contravened the Trade Practices Act 1974 in 2005 by bidding on competitor brands "Kloster Ford" and "Charlestown Toyota", companies which compete against Trading Post for vehicle sales.

By allowing this to happen, Google has been acused of misleading and deceptive conduct.

In a related action, the ACCC alleges that Google, by failing to adequately distinguish sponsored links from "organic" search results, has engaged and continues to engage in misleading and deceptive conduct.

The ACCC is seeking:

declarations that Trading Post contravened sections 52 and 53(d) of the Act
declarations that Google contravened section 52 of the Act
injunctions restraining Trading Post from representing through sponsored links an association, sponsorship or affiliation with another business where one does not exist
injunctions restraining Google from publishing sponsored links of advertisers representing an association, sponsorship or affiliation where one does not exist
injunctions restraining Google from publishing search results that do not expressly distinguish advertisements from organic search results
orders that Trading Post and Google implement trade practices compliance programs
an order that Google publish a notice on its website outlining the above, and
costs

The ACCC claims this is the first action of its type globally. Whilst Google has faced court action overseas, particularly in the United States, France and Belgium, this generally has been in relation to trademark use.

Although the US anti-trust authority the Federal Trade Commission has examined similar issues, the ACCC understands that it is the first regulatory body to seek legal clarification of Google's conduct from a trade practices perspective.

Search Engine Room: July 31, 2007