Jarosław Sroczyński on brand bidding: Are there any limits to market collusion? It turns out that collusion can also take place with regard to keywords

Are there any limits to market collusion? It turns out that collusion can also occur with keywords. In search engine marketing (Google, Bing), advertisers bid on brand-related keywords (e.g., Nike, Adidas = brand bidding) or generic terms (running shoes = non-brand bidding).

The European Commission now suspects travel agencies of a “non-aggression pact” regarding brand bidding, involving a mutual agreement not to bid on competitors’ names. As a result, consumers see only the offer from the company whose name they entered in the search engine, and not competing offers from other companies.

Meanwhile, the Swiss antitrust authority COMCO suspects collusion not only among travel agencies but also among online casinos regarding non-brand bidding. This involves keywords such as “cheap vacations,” “last-minute trips,” or “online casino Switzerland.”

Cartels generally harm consumers; in this case, they may limit the ability to quickly compare prices and service standards. On the other hand, bidding on keywords costs global players (e.g., Booking.com, Expedia) billions of dollars. So, while the collusion is artificial, it does reduce advertising costs—a fact that search engines do not appreciate.

In a broader context, there is also the issue of using someone else’s trademark as a keyword (the Google France case, C-236/08, and the Interflora case, C-323/09), which is permitted if it does not mislead consumers as to the origin of the goods. All in all, quite a mess…