On 5 May 2016 the Court of Milan condemned Google to pay EUR 503.400,95 plus interests for late payment for lack of fairness and abuse of economic dependence in the context of the early termination of a contract entered into with the advertising and search engine operator Attrakt. The Italian court also condemned Google to pay damages to be quantified in a follow-on proceeding.
As reported by the Italian law firm MMLex, the important judgment concerns the abuse of relative contractual power (so-called “abuse of economic dependence”), pursuant to article 9 of Italian Law 192/1998.
The case brought to the Court’s attention concerned two related agreements, for the AdWords and AdSense services respectively, which were entered into between Google and Attrakt. The latter was a company operating in the design, development and provision of online advertising and website management services and also ran its own proprietary search engine.
Under the AdWords arrangements, Attrakt purchased several key-words, in order to appear on top of Google’s search engines results, while, under the AdSense agreement, Attrakt made available to Google advertising space on its own website for consideration.
Although Attrakt was becoming quickly one of Google’s top partner, in January 2013 Google unilaterally decided to terminate the AdSense agreement, on the basis of an illicit click bait activity and a violation of Google’s terms of service, allegedly perpetrated by publishing pornographic material. Upon termination, Google also withheld the payment of a large amount of money, accrued in favour of Attrakt under the AdSense agreement.
The Court of Milan found that Google’s conduct would amount to a breach of the good faith general principle and to an abuse of economic dependence, sanctioned under article 9, Law 192/1998.
The overall situation that emerges from the contracts and from the facts is that of a real imbalance between the parties, and the ”ad nutum” cancellation demonstrates – according to the Court – Google’s lack of fairness in the execution of the contract.
Attrakt financial capacity was severely strained by Google’s conduct to immediately suspend the service and freeze a two month worth value of AdSense advertisement, to the extent that Attrakt was effectively unable to find alternative revenue sources. Of interest is that the Court, having found that Google was culpable for abuse of economic dependence under the special provisions of the law, did not consider it necessary to investigate the concomitant accusation for abuse of dominant position which was also brought by Attrakt. The Court in fact consider the abuse of dominance absorbed by the said finding. The reason for this Court’s stance, although not expressly stated by the Court, can reasonably be found in that the offence of abuse of economic dependence only requires the demonstration of relative negotiating power, as opposed to the abuse of dominance offence, which instead calls for the assessment of the incumbent’s position on the market concerned vis-à-vis all potential stakeholders. Hence in a concentric hypostatization of the relation between abuse of economic dependence and abuse of dominance offences, it could be said that the former is the inner smaller circle.
The Court’s ruling appears essential in order to confirm the protection afforded by the law to the weaker contracting party from the abusive and arbitrary conduct of the other party. This case seems to make good use of legal principles relating to the interpretation of contracts and abuse of economic dependence, thereby securing an effective protection for the company that suffers the consequences of the abuse.