Year in review 2021: EU, EEA and Competition Law

| Insight

Our EU legal team is about to end another year with many interesting cases. This article highlights three cases with a particular interest beyond the specific matter due to their principal importance.

The Supreme Court ended the «Google Ads» case saga
The Supreme Court’s recent ruling (14 December 2021) in a case brought by several competing banks against Bank Norwegian ends a many-year-long saga concerning the use of competitors’ trademarks in search engine advertising.

The competitors’ brought the case against Bank Norwegian before the Oslo City Court in 2017. The background was that Bank Norwegian disagreed with the Business Competition Committee («NKU») that, in an advisory decision, concluded that the bank’s use of competitors’ trademarks to generate search results for its ads using Google Ads and Bing’s advertising service violated the Marketing Act. The NKU’s advisory decision, which the parties typically follow, although not formally enforcanle or binding, was a follow-up to NKU’s consistent practice in several cases from 2012 (in the so-called Teppeland case) and until recently. In the Teppeland case, the NKU referred to using a competitor’s trademark or company name as paid search words to generate hits for search engine ads as «disloyal exploitation» of a competitor’s goodwill. The NKU concluded that such advertising practices violate the Marketing Act Section 25 that provides that «No act shall be performed in the course of trade which conflicts with good business practice among traders.»

The NKU’s prior decisions have been subject to extensive comments in legal circles, especially after the European Court of Justice’s ruling in the Interflora case in 2011. In the Interflora case, the European Court of Justice concluded that the trademark holder is not protected from such use. On the contrary, the advertising practice «falls, as a rule, within the ambit of fair competition in the sector for the goods or services concerned and is thus not without ‘due cause’ …»  Trademark protection may therefore not be established unless an average internet user is misled into believing that there is an «economic link» between the advertiser and the trademark holder. Trademark law is fully harmonized within the EEA, and thus there was an apparent norm collision between NKU’s decisional practice and EU trademark law. Contrary to trademark law, however, national marketing laws are not fully harmonized within the EU/EEA.

The Supreme Court concluded that Bank Norwegians had not acted disloyally, and in chamber unanimously conceded with the first reporting judge’s statement:  «I can hardly see that actions that in a trademark law context are regarded as expressions of healthy and loyal competition, can at the same time be judged as disloyal and thereby prohibited as contrary to good business practice».

Simonsen Vogt Wiig and  Jan Magne Langseth acted as Bank Norwegian’s counsel before the Supreme Court.

Estimated willingness to pay in public procurement
We assisted a public client in a case in which a supplier requested a temporary injunction to stop a contracting after a public competition. The EU Court’s practice related to award criteria and evaluation models was central to the outcome of the case. The procurement followed the rules of the Supply Regulations and it was stated on the part of the supplier that the award was illegal because the client through the evaluation model had shifted the weight of the award criteria. The supplier did not arrive at this point, but the case is special because the case revolved around the client’s calculated willingness to pay for quality differences. This is something that clients generally have a little conscious relationship with, but there should probably be a change here if the supplier market continues to sue on a similar basis as in this case.

State aid law clarification of the so-called adjustment model/VAT compensation in agreements on infrastructure development
We have assisted a developer in the case of a state aid law clarification of the so-called adjustment model/VAT compensation in agreements on infrastructure development. The adjustment model is for a private developer to design infrastructure that will be transferred free of charge to the public sector upon completion. The developer himself does not have the right to deduct input VAT on infrastructure costs, but assigns the right of adjustment. Overall, the question has been the need for clarification from the ESA on which model will be compatible with the state aid rules’ requirement that the public sector act in accordance with the market investor principle. The lack of clarification has created uncertainty for actors and has partly prevented the players from agreeing on a model for infrastructure development. Assuming that the public sector practices the adjustment model equally towards private developers, ESA has clarified that the public sector’s payments to private developers through the adjustment model may be compatible with the state aid rules.

The ruling in the calculated willingness to pay case is available here (in Norwegian):
https://lovdata.no/pro/#document/TRSIV/avgjorelse/tosl-2021-122391?searchResultContext=1232&rowNumber=1&totalHits=90

The verdict in the «Google Ads» case is available in full text here (in Norwegian):
https://lovdata.no/avgjorelse/hr-2021-2479-a