Tag: Google Ads

Procedural Misstep Topples Interim Order Against Google in Lottoland Dispute, or: the Power of (Missing) Ink

Posted on by Editor

By Jannes van der Merwe and Jenna Carrazedo

Introduction

On 12 of November 2024, the Competition Tribunal (“the Tribunal”) granted an interim relief order in favour of  Lottoland South Africa (Pty) Ltd (“Lottoland”) against Google Ireland Limited (“Google”) and Google South Africa (Pty) Ltd (“Google SA”). The Tribunal, sitting with a full panel of three members, provided substantive reasons in favour of Lottoland for their complaint lodged in December 2022, regarding the contravention of the Competition Act 89 of 1998 (“the Act”) by Google SA against Lottoland in 2020. The matter before the Tribunal involved Lottoland obtaining an interim relief order against Google SA for a period of six months or until the finalisation of the complaint, whichever occurs first, ordering Google SA to restore Lottoland’s access to Google advertisements (“Google Ads”) after Google SA terminated Lottoland’s access to Google Ads claiming that Lottoland had breached Google SA’s internal policies.[1]

Google brought a review against the decision by the Tribunal, arguing that the Order provided by the Tribunal is irregular because of its failure to adhere to Section 31(2)(a) of the Act. Section 31(2)(a) of the Act requires that the Chairperson of the Tribunal ensure that that at least one member of the panel is a person who has legal training and experience. Google argued that because the Order by the Tribunal was not signed by Adv Tembeka Ngcukaitobi SC (“the Presiding Member”), the appointed member with such legal training and experience, the Order by the Tribunal is irregular.

Google’s legal representatives addressed a letter to the Chairperson of the Competition Tribunal advising that the Presiding Member did not sign the decision and that this contravenes section 31(2)(a) of the Act. Google requested that the decision be withdrawn due to the Competition Tribunal acting beyond the powers conferred onto it by the Act.

Despite Google’s contention that the Order should be withdrawn, both the Chairperson of the Tribunal, and Lottoland, responded to Google, stating that the proceedings have been concluded and that the Order is in accordance with the Act, referencing Section 31(4) and 31(6) of the Act. This stance adopted by Lottoland, as well as the Chairperson of the Tribunal, caused Google to launch their review to the Competition Appeal Court of South Africa (“the Appeal Court”).

Does an irregular decision amount to no decision?

Lottoland argued that the decision taken by the Tribunal was in fact a valid decision, as it was in compliance with Section 31 of the Act. However, Lottoland argued that, while maintaining that there is a valid decision taken, on Google’s own version the Appeal Court would not have jurisdiction to hear the review, as there would have been no decision taken by the Tribunal.

On this version, Lottoland contested whether the Appeal Court has jurisdiction to hear the review matter, stating that the decision itself is not in fact a decision of the Competition Tribunal, as it did not carry the Presiding Member’s express endorsement. In this regard, Lottoland argued that the requirements for the Appeal Court to exercise its review powers in terms of Section 37(1)(a) were not present, as it does not have the power to decide whether a decision is in fact a decision of the Competition Tribunal, or declare a decision invalid, which is not a decision. In support of its argument, Lottoland contended that Google should have pursued its remedies in terms of the Promotion of Administrative Justice Act, 3 of 2000, to set aside the decision of the Tribunal.

Google argued that the ‘decision’ taken by the Tribunal is ultra vires, as the Tribunal’s failure to have all three members of the panel contribute to the proceedings and exercising its functions in terms of Section 27 of the Act, led to the Tribunal’s failure to comply with Section 31(2)(a) of the Act. They further contended that Lottoland’s misinterpretation of their argument is wrong, as Google did not argue that the failure by the Presiding Member to contribute and sign the Order resulted in ‘no decision’ by the Tribunal, but that such ‘decision’ does not comply with Section 31(2)(a) of the Act. Google proffered the argument that the Appeal Court has the authority to review the decision made by the Tribunal in terms of Section 37(1) of the Act.

Accordingly, Google did not request the Appeal Court to determine whether a decision was taken, or whether such decision was unlawful, Google argued that the rendering of the decision is procedurally irregular as it did not comply with section 31(2)(a) of the Act. This is because the Presiding Member did not sign it, and that such a decision should be reviewed and set aside.

It was ultimately found that the Appeal Court has the jurisdiction to hear the review matter.

Procedural Irregularities

It is agreed that the interim relief matter was heard before a properly constituted panel and was properly assigned, however the review application seeks to investigate whether the Presiding Member’s failure to sign the Order caused an irregularity in the decision.

Google argued that the Act empowers three members of the panel to deliberate a matter, acting jointly and their failure to do so results in the panel not acting in accordance with the Act. To this extent, it was argued that the Presiding Member’s failure to participate in the proceedings until the matter is finalised is detrimental, as the interpretation of the Act requires a member with legal training and experience to signal finality. This failure resulted in the two members issuing the decision, which was against the provisions of the Act, as the Tribunal making the decision is an authoritative body encompassed by three members, and the failure to adhere thereto renders their decision irregular.

Lottoland argued that the two-panel member’s decision is in accordance with Section 36(6) of the Act and constituted a lawful decision. Relying on the matter between JSC v Cape Bar[2], Lottoland contested that the authority supports the argument that the members of the panel did not have to act jointly when having regard to the statutory provisions, because when there is a decision made by two-members, this renders a majority decision made by the panel members. Lottoland adopted the approach that the Presiding Member’s failure to render a decision as being “exceedingly passive”, and that the two-member decision is sufficient.

However, the matter brought before the Tribunal was assigned to three members but when reasons for the decision were circulated, no comments were received from the Presiding Member, with no explanation. The Appeal Court answered this question by putting forth that the Presiding Member did not participate in the proceedings, therefore the panel did not act jointly with no explanation for his failure to participate. The Appeal Court held that the decision falls to be reviewed and set aside.

The Appeal Court also considered whether to remit the decision back to the Tribunal or substitute the Order. As confirmed in Glaxo Welcome (Pty) Ltd and Others v Terblanche N O and Others, [3] the Appeal Court can correct the decision of the Tribunal where the result is a foregone conclusion or when further delay would cause undue prejudice. The Appeal Court that there was not a foregone decision but there was delay that has prejudiced Lottoland that Google has not addressed. However, the Appeal Court expressed its concerns and difficulty in granting a substitution order when the skills and expertise of the Tribunal are for the purpose of making these decisions mindfully. Thus, the Appeal Court was not satisfied that a substitution order should be granted as such a solution would be impractical when considering the brief period left in which the interim order will still be in effect.

The decision of the Appeal Court reviewed and set aside the decision of the tribunal.

Implications of the Tribunal’s Decision

This matter again highlights the importance that correct procedure is followed as to avoid decisions from being set aside once handed down. The administrative error of the Tribunal has resulted in more questions than answers.

Lottoland’s complaint, lodged in December 2022, was set down for hearing on 19 July 2023, despite the procedural directives after the hearing, the Tribunal only provided its decision on 12 November 2024, approximately 16 months after the initial hearing. Despite this delay, the Tribunal and its Presiding Member failed to ensure that its Order was compliant with the Act. As a result, and while acknowledging Lottoland’s own failure to launch the interim relief proceedings earlier, Lottoland was prejudiced by severe delays and, according to the Tribunal’s now set aside decision, were being harmed in the market by Google SA’s conduct, restricting Lottoland from making use of Google Ads.

It is worth noting that no reason was given for the lack of the Presiding Member’s participation and signature, only that he failed to do so. The seemingly insignificant act of signing an Order to comply with formalities, alternatively, a member’s failure to contribute, carries substantial weight, this is seen in the setting aside of the decision all because the one panel member with legal training and experienced failed to sign it.

This, unfortunately, resulted in further resources being expended by both Lottoland, Google, the Tribunal, and the Appeal Court. Proper procedure should always be followed to benign topics from evolving into a long, lengthy and costly process.

This judgement sets precedent for the setting aside of a decision of what can be labelled as administrative errors due to an appointed Presiding Member’s lack of participation, leading to procedural irregularities. As the Appeal Court rightfully stated, the Act regulates and controls proceedings and the functions of the authoritative bodies exercising their duties. Failure to comply with the Act should not be disregarded as an exceedingly passive point to take, but a failure to extinguish your duties for which you were appointed in terms of the Act, which causes harm and prejudice to the litigating parties.

[1] See https://africanantitrust.com/2025/01/29/betting-on-fair-play-competition-tribunal-orders-interim-relief-to-lottoland-in-google-ads-dispute/ by Matthew Freer, setting out the merits of the Interim Relief Order.

[2]Judicial Service Commission and Another v Cape Bar Council and Another (818/2011) [2012] ZASCA 115; 2012 (11) BCLR 1239 (SCA); 2013 (1) SA 170 (SCA); [2013] 1 All SA 40 (SCA) (14 September 2012)

[3] Glaxo Welcome (Pty) Ltd and Others v Terblanche N O and Others [2001-2002] CPLR 48 (CAC).

Betting on Fair Play: Competition Tribunal orders Interim Relief to Lottoland in Google Ads dispute

Posted on by Editor

By Matthew Freer

Introduction

On 12 November 2024, Lottoland South Africa (Pty) Ltd (“Lottoland”) was granted interim relief by The Competition Tribunal (“The Tribunal”) against Google Ireland Limited and Google South Africa (Pty) Ltd (collectively “Google”).

Lottoland, a licensed bookmaker as of 7 November 2017 in terms of the Western Cape Gambling and Racing Act, offers fixed-odds bets on the outcome of an array of lotteries worldwide, including the South African National Lottery and various sporting events.[1] Lottoland’s competitors include other licensed bookmakers within the country such as Hollywood Bets, World Sports Betting and Betway, among others. Google, controlled by Google LLC, is a multinational technology company specialising in internet-related services and products, including search engines, online advertising technologies and more. Google is best known for its search engine and advertising platform, Google Ads, which is a key revenue driver for the company. Google Ads allows businesses to display advertisements on Google’s search engine results pages, partner websites and other platforms using a pay-per-clicks model where advertisers bid on keywords to reach targeted audiences. Businesses utilise this service to maximise visibility with the aim of gaining more customers.

In 2020 Google terminated Lottoland’s access to Google Ads, which Lottoland argued was without justification given that the other licensed bookmakers, providing like services, still had access to Google Ad Services. This termination caused financial harm to Lottoland, and it was argued to distort the competition in this very market that Lottoland operated with detrimental effect on options available to consumers. Google’s main argument was that Lottoland’s services contravene certain sections of the Lotteries Act and by granting them access to their Google Ads services, Google’s policies and reputation could be under scrutiny in a public light.

What is an Interim Relief Application?

An Interim Relief Application, in terms of by section 49C of the Competition Act, 89 of 1998 (“Act”), is a temporary measure sought to address an alleged prohibited practice and aimed to prevent serious or irreparable harm pending the outcome of a hearing.[2] “The Tribunal will only grant such relief if it is of the opinion that it is reasonable and just, having regard to the following factors:”[3]

  • The evidence relating to the alleged prohibited practice;
  • the need to prevent serious or irreparable damage to the applicant; and
  • the balance of convenience.

The Tribunal must make a summary assessment before granting such application and this assessment is only at a “prima facie level”.[4] The Tribunal has held that the three above steps must be applied holistically whilst balancing each factor against the other. In this regard “a weak case on say irreparable harm may be counterweighted by a very strong case on the prohibited conduct. And vice versa…”.[5]

In the event an interim relief order is granted, it operates for a period of six months from its date, or the conclusion of the hearing, whichever is earliest.

What is the prohibited practice?

The basis of Lottoland’s application was that Google had contravened sections 8(1)(d)(ii) and 8(1)(c) of the Act.[6] Section 8(1)(d)(ii) states that a firm may not engage in exclusionary acts, such as refusing to supply scarce goods or services to a competitor or customer, unless it can demonstrate that the technological, efficiency, or other pro-competitive benefits outweigh the anti-competitive impact of its actions, and providing the goods or services is economically feasible.[7] Section 8(1)(c) prohibits a dominant firm from engaging in an exclusionary act if the anti-competitive effect of that act outweighs its technological, efficiency or other pro-competitive gain.[8] The overarching element that must be proved in both instances is that there must be a showing of dominance by the firm within the market in question.

A showing of dominance

Google raised the argument that they are not dominant within the ‘advertising ecosystem’ which includes both online (Google Ads) and offline advertising (print media, billboards, television, etc.) However, The Tribunal took a more detailed approach to determine the specific market Google is operating in, while accounting for the market in which Lottoland and its competitors are advertising in. The Tribunal refused the idea that the market in issue is that of the broader ‘advertising ecosystem’ but it is rather the specific market of online advertising, and even more specifically, the market for online search and search engine marketing (“SEM”) markets. The Tribunal stated that the service of Google Ads operates within this specific market, and it was proven, prima facie, that Google is likely to be dominant in this market in South Africa. Thus, rejecting Google’s argument that they should be viewed as operating in the broader ‘advertising ecosystem’.  

Lottoland submitted that Google has a market share of more than 90% in the SEM market, measured by search volume, and states that such dominance is well-established as The Commission had stated that Google is “the monopoly provider of intent-based marketing and customer acquisition in SA…”.[9]

Section 8(1)(d)(ii) and 8(1)(c) of the Competition Act

Now that dominance is established, we can break down and analyse each element that needs to be proved in terms of this section. The first element involves a refusal to supply a customer. On the face of such scenario, Google has refused to supply Lottoland with their service of Google Ads as Google terminated Lottoland’s access. Google had argued that by allowing Lottoland access to such service there is a potential for criminal liability or other commercial risks. The Tribunal’s ultimate findings was that this argument lacked basis as Lottoland’s competitors were provided access, showing an inconsistent enforcement of Google’s “internal policies”. Furthermore, The Tribunal stated that there is insufficient evidence to suggest that Lottoland had contravened the Lotteries Act.

The second element of proof is that of scarce goods or services. It was indicated in eMedia that a scarce good or service is one that is i) impossible or prohibitively expensive to duplicate or ii) there are effective substitutes for the service.[10] In GovChat, The Tribunal explained that a ‘scarce’ good or service is one that “cannot be easily duplicated without significant capital investment.”[11] Google’s main argument rested on the fact that there are numerous alternatives to Google Ads, all of which are viable and pose significant competitive constraint on Google Ads. However, The Tribunal in this case concluded that SEM services cannot be easily duplicated without significant capital investment and there is no feasible substitute, thus, rejecting Google’s argument and establishing the scarcity of Google Ads.

Alongside the above elements, it must be shown that it is economically feasible for Google Ads to supply Lottoland with Google Ads services. Lottoland seeks nothing more than to have access to Google Ads, as do their competitors. This equitable access request, and as is the opinion of The Tribunal, would prima facie not be impractical or unfeasible, the continued access to Lottoland’s rivals being a determining factor. The fact that Google has supplied Lottoland with Google Ads for some time before terminating access also suggests that it is not economically unviable to do so again.

Once the above has been established, harm is presumed, and the onus would typically shift to the respondent to show that these harmful effects are outweighed by pro-competitive gains. The Tribunal found that Google had no competition-related rationale for their actions and thus, there conduct prima facie distorts competition in the downstream market without any pro-competitive of efficiency justification presented or argued by Google.

Our assessment above, whilst done in the context of Section 8(1)(d)(ii) is also relevant for purposes of Section 8(1)(c). The Tribunal concluded that for reason stated under the section 8(1)(d)(ii) discussion, Google has also violated the provisions of section 8(1)(c). Google’s conduct has a prima facie anti-competitive effect, distorting competition by not allowing Lottoland to expand within their market relative to their rivals. The conduct was not found to be outweighed by technological, efficiency or pro-competitive gain and Google had little to no arguments in this regard.

Application of section 49C(2) of the Act

Lottoland submitted that Google’s refusal to allow it to use Google Ads resulted in Lottoland’s customer registration rate dropping significantly. Lottoland supplemented this with a monetary amount of the revenue that they had suffered as a result of Googles refusal to supply their Google Ads service, which, up until the interim relief was ordered, was ongoing. The Tribunal concluded that this is prima facie evidence that, due to Google’s conduct, Lottoland have suffered ‘serious or irreparable damage’, meeting one of the three stages of section 49C(2) of the Act. Additionally, the preamble of the Act states the importance to “provide for markets in which consumers have access to, and can freely select, the quality and variety of goods and services they desire”, with the overarching purpose of promoting and maintain competition in the Republic for the ultimate benefit of the consumer. It is clear that Google’s conduct has limited the choice for end-consumers.

With reference to ‘the balance of convenience’, The Tribunal weighed up the harm suffered by each party if they were to grant/refuse the application for interim relief, pending a decision on merits and stated that if there is clear and non-speculative evidence that suggest, and to what extent, a party will suffer harm if the relief was not given, then such relief should be given. It was stated in eMedia that “whilst there will inevitably be disputes of fact”, the Tribunal should still take a robust approach on the evidence before it, and that “if there is a prima facie right, even one open to some doubt and well-grounded apprehension of irreparable harm if the relief is not granted and ultimately granted at a final relief stage, then the balance of convenience favours the grant of the relief.”[12]

The Tribunal concluded that Lottoland had made out a prima facie case of restrictive practices and well as the irreparable harm it has suffered, therefore the balance of convenience, as shown, favours granting of interim relief. The requirements of section 49C of the Act have been satisfied and there is a case for interim relief.

Key takeaways

This case highlights critical elements that The Tribunal considers when assessing prohibited practices and granting interim relief under the Act. For a prohibited practice, The Tribunal focuses on determining market dominance, the exclusionary nature of the conduct, and whether the anti-competitive effects outweigh any pro-competitive justifications. The Tribunal’s approach to market dominance was particularly noteworthy. Instead of accepting Google’s broad definition of the market as the ‘advertising ecosystem,’ The Tribunal adopted a narrower definition focusing on the specific market for SEM services. This refined approach allowed for a more precise assessment of competition dynamics, underscoring Google’s overwhelming dominance in the SEM market.

The Tribunal further scrutinised Google’s refusal to supply Lottoland and its inconsistent application of internal policies, emphasising the scarcity of Google Ads as a service and its critical role for businesses reliant on digital advertising. Regarding interim relief, the Tribunal assesses whether there is prima facie evidence of a prohibited practice, serious or irreparable harm to the applicant, and whether the balance of convenience favours granting relief. Notably, the Tribunal’s robust and detailed approach to evaluating dominance and harm provides a roadmap for future cases, emphasizing the importance of context-specific market definitions and balancing the interests of all parties involved. This case underscores the Tribunal’s commitment to protecting competition and consumer choice while maintaining fairness in digital markets.

Joshua Eveleigh, Managing Associate at Primerio International says:

“At its crux, this matter dealt with the weighing up of the alleged risks and reputational harm to Google against the claimed foreclosure of Lottoland in the downstream market. Importantly, the Tribunal clarified that its mandate is to pronounce on how conduct may distort competition in a market.

Hence, if there is prima facie proof of anti-competitive conduct which cannot be outweighed on a balance of convenience, an application for interim relief must succeed. This is a particularly noteworthy judgement for firms operating within regulated environments. In effect, a dominant firm will be hard placed to cut-off services to a customer if, for example, it does not have clear evidence that the customer engaged in unlawful conduct.”

[1] Western Cape Gambling and Racing Act 4 of 1996.

[2] Competition Act 89 of 1998 (the “Act”), sec 49C.

[3] The Act, sec 49C(2).

[4] eMedia Investments (Pty) Ltd SA v MultiChoice (Pty) Ltd and Another, Case No. 201/CAC/Jun22 (“eMedia”), para 93.

[5] GovChat (Pty) Ltd and Hashtag Letstalk (Pty) Ltd v Facebook, Inc and Others, Case No. IR165Nov20 (“GovChat”), para 160.

[6] The Act, sec 8(1)(d)(ii) and 8(1)(c).

[7] The Act, sec 8(1)(d)(ii).

[8] The Act, sec 8(1)(c).

[9] Competition Tribunal of South Africa, Lottoland South Africa (Pty) Ltd v Google Ireland Limited and Google South Africa (Pty) Ltd, Case No: IR191Mar23 (Reasons for Decision and Order), para 78.1.

[10] eMedia, para 129.

[11] GovChat, para 113.

[12] eMedia, para 83 and 95.