Yahoo said it has provided European Commission officials with information on its ad tie-up with Google, perhaps pre-empting scrutiny from the European regulatory body. Google, on the other hand, indicated it expects the Commission to steer clear of the North American deal.
Although the deal itself is only applicable in the U.S. and Canadian markets, it appears that the Commission may have jurisdiction in the matter since it could potentially affect European businesses.
“This agreement does not cover Europe, although we have provided information to European Commission officials about the arrangement,” a Yahoo spokesperson said in a statement e-mailed to ClickZ News on Thursday.
However, according to a spokesperson for European Competition Commissioner Neelie Kroes, “To date, the Commission has not received a notification on Google/Yahoo.” The spokesperson added, “It is always the responsibility of parties involved in a merger transaction to notify the Commission if it meets the criteria of the EU Merger Regulation.
Today, the Yahoo spokesperson affirmed, “We have provided information on the agreement to EU officials.”
When asked if it would provide the Commission with information on the tie-up, Google said, “The deal only applies to Yahoo’s U.S. and Canadian Web properties, so we do not expect the European Commission to review the arrangement.”
The European Commission Web site defines a merger as companies “combining forces,” and says it has jurisdiction in non-E.U. affairs as “even mergers between companies based outside the European Union may affect markets in the E.U. if the companies do business in the E.U.”
Douglas Lahnbourg, antitrust partner at Heller Ehrman, validated this, stating, “The Commission has jurisdiction to investigate the [Google/Yahoo] arrangement if it affects trade between EU Member States.”
Presumably, the agreement could affect European advertisers, potentially influencing the price of keywords and the positioning of ads placed by Yahoo and Google, should it go ahead.
EU Merger Regulation states companies potentially subject to inspection must have joint global annual revenues of at least €5 billion ($7.8 billion), with each party generating at least €250,000 (around $400,000) annually within Europe. Google reported revenues of $4.83 billion in Q4 2007 alone, with revenues from the U.K. totalling in excess of $690 million.
The news comes as the U.S. Department of Justice has begun an investigation into antitrust concerns surrounding the agreement in the U.S. The Federal Trade Commission is not expected to get involved in the matter, standing aside to allow the DOJ to conduct its inspection of the deal.
Both the FTC and the European Commission conducted thorough investigations into Google’s recent purchase of ad technology firm DoubleClick; both bodies eventually passed the merger, finding no significant concerns with regards to competition.