1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: IR191Mar23
In the interim relief application between:
LOTTOLAND SOUTH AFRICA (PTY) LTD Applicant
And
GOOGLE IRELAND LIMITED First Respondent
GOOGLE SOUTH AFRICA (PTY) LTD Second Respondent
Introduction
[1] This matter concerns an application for interim relief in terms of section 49C of the
Competition Act 89 of 1998, as amended (“the Act”). The applicant, Lottoland
South Africa (Pty) Ltd (“Lottoland”), contends that the first and second
respondents, Google Ireland Limited and Google South Africa (Pty) Ltd
(collectively “Google”) have engaged in conduct that amounts to prohibited
practices in terms of sections 8(1)(d)(ii) and/or 8(1)(c) of the Act.
[2] Lottoland alleges that in September 2020, without any legitimate justification,
Google terminated Lottoland’s access to Google’s advertising services “Ads
Services” (more accurately known as “Google Ads”), which Lottoland had used
Panel : T Ngcukaitobi (Presiding Member)
: AW Wessels (Tribunal Member)
: T Vilakazi (Tribunal Member)
Heard on : 19 July 2023
Last submission on : 09 October 2023
Reasons issued on : 12 November 2024
REASONS FOR DECISION AND ORDER
2
since March 2020.
Lottoland further alleges that it has since been refused access
to Google Ads despite it being economically feasible for Google to provide this
service to it. 2 Lottoland argues that Google’s conduct has not only caused it
financial harm, but it has distorted competition in the market in which Lottoland
competes to the detriment of consumers.
[3] On 2 December 2022, Lottoland lodged a complaint against Google with the
Competition Commission (“Commission”).
[4] Lottoland is a licensed bookmaker, which, inter alia, offers fixed-odds bets on the
outcome of various lotteries around the world, including the South African national
lottery, sporting events and other betting contingencies. Of relevance is that
Lottoland is the holder of a bookmaker’s licence first issued to it by the Western
Cape Gambling and Racing Board (the “WCGRB”) on 7 November 2017 in terms
of the Western Cape Gambling and Racing Act (the “WC Act”).3
[5] Lottoland competes with other licensed bookmakers in South Africa such as
Hollywood Bets, World Sports Betting, Betway, Betfred (which owns Lottostar),
and Netbet (which trades as Sportingbet).4
According to Lottoland, all of these
bookmakers offer competing fixed-odds bets on the outcome of lotteries and sports
events, amongst others.5
[6] The respondents form part of a broader group of companies ultimately controlled
by Google LLC, a multinational technology company that, through various
subsidiaries around the world, provides a wide range of internet-related services
and products including online advertising technologies, search, cloud computing,
software and hardware. 6
The first respondent, Google Ireland Limited (“Google
Ireland”), is licensed by Google LLC to operate as a service provider responsible
for Google Ads in South Africa as well as the broader Europe, Middle East and
Africa regions.
1 Lottoland Founding Affidavit, at para 15.
2 Ibid, at para 16.
3 Ibid, at paras 31, 86 and 87.
4 Ibid, at para 116.
2 Ibid, at para 16.
3 Ibid, at paras 31, 86 and 87.
4 Ibid, at para 116.
5 Lottoland Founding Affidavit, at para 114, p844; Replying Affidavit at para 46 and following.
6 Google Heads of Argument, at para 2.1.
3
[7] Google Ads is an online advertising platform where advertisers can access tools
to create advertisements (“ads”), bid to display ads, and track the performance of
their ads, etc. Advertisers may choose to display their ads in multiple different
places depending on their campaign goals, including on the Google Search7
page.8
[8] The relief which Lottoland seeks in terms of its Notice of Motion9
is:
“Pending the conclusion of a hearing into the alleged prohibited practices in
terms of section 8(1)(c) and 8(1)(d)(ii) that are the subject of the applicant's
complaint to the Competition Commission as detailed in the CC1 Form which is
annexed to the applicant's founding affidavit as FA1, or six months from the date
of the order, whichever occurs first:
1.1. The first and second respondents (collectively "Google") are directed to
permit the applicant to access Google's Ads Services platform;
2.2. The applicant shall for the duration of such access adhere to Google's terms
and conditions and shall be obliged to pay Google's fees for such access in
accordance with such terms and conditions;
…”…”
[9] In terms of an amended Notice of Motion, 1010 Lottoland sought the following
alternative relief to the relief in 1 above:
“Alternatively… for so long as Google permits any firm in South Africa to
utilise Google's Ads Services to advertise fixed-odds betting on the
outcome of lotteries, Google is directed to permit the applicant to access
Google's Ads Services for the same purpose”.
[10] The Commission has filed a notice of intention to abide by the Tribunal’s decision.
7 Google Search is a search engine operated by Google.
8 Google Ireland Answering Affidavit, at para 2.5.
9 Lottoland Notice of Motion, at paras 1-2, p1.
1010 The amended notice of motion was attached to Lottoland’s affidavit in answer to Google
Ireland’s application to file a supplementary answering affidavit as annexure “AA4” dated 18 July
2023.
4
Factual background
Procedural issues
[11] Prior to the hearing on 14 July 2023, Google Ireland applied for leave to file a
supplementary answering affidavit to place evidence before the Tribunal about the
steps it has taken, and is intending to take, to address its enforcement of its policies
regulating the use of Google Ads, following the submissions by Lottoland which
alleged that Google inconsistently applies its advertising policies to Lottoland when
compared to other firms. Thereafter, on 18 July 2023, Lottoland filed an affidavit in
opposition to Google Ireland’s application to file a supplementary answering
affidavit as well as an answer submitting inter alia that Google cannot continue to
prohibit Lottoland from using Google Ads unless and until it has meted out the
same treatment to all of Lottoland’s competitors.11
11
[12] At the hearing, Lottoland maintained its opposition to Google Ireland’s
supplementary answering affidavit being admitted. After hearing the parties, the
Tribunal made a ruling to provisionally admit the further affidavit, subject to Google
Ireland submitting a signed affidavit. 1212 We do not see any material prejudice to
Lottoland if Google Ireland’s further affidavit is admitted. Google Ireland
subsequently filed the signed and notarised supplementary answering affidavit on
27 July 2023. 3
3 In the circumstances, we grant Google Ireland leave to file the
supplementary answering affidavit.
[13] Following the hearing on 19 July 2023, the Tribunal requested written submissions
from the parties regarding the provisions of section 57 of the National Lotteries Act,
1997 (“Lotteries Act”) and whether or not the said provisions permit any exceptions
from criminal sanctions, as submitted by Lottoland. The relevant sections of that
legislation provide as follows:
1111 Lottoland’s answer to the First Respondent’s application to file a supplementary answering
affidavit, at para 35.
1212 Hearing Transcript, p168.
affidavit, at para 35.
1212 Hearing Transcript, p168.
1313 The signature on the affidavit was dated 19 July 2023.
5
Section 57(1):
“Any person who –
(a) participates in; or
(b) conducts, facilitates, promotes or derives any benefit from the lottery,
promotional competition or sports pool, shall, unless such lottery, promotional
competition or sports pool is or has been authorised by or under this Act or
any other law be guilty of an offence;” and
Section 57(2)(g):
“Any person will be guilty of an offence if he or she –
conducts, organises, promotes, devises or manages any scheme, plan,
competition, which directly or indirectly provides for betting, wagering, gambling
or any other game of risk on any outcome of any lottery unless authorised by or
under this Act or any other law.”
[14] In addition, Lottoland was requested to provide its annual financial statements for
the period in which it submits it suffered a reduction in revenue, as stated in
paragraph 45 of its Founding Affidavit . The parties filed their submissions on 28
July 2023.
[15] On 10 August 2023, the Tribunal received a letter from Lottoland regarding the
Commission publishing its final report in respect of its Online Intermediation
Platforms Market Inquiry (“OIPMI”). Lottoland had referred to the Commission’s
provisional report in its pleadings and arguments made at the hearing in respect of
Google’s purported dominance in the search and search engine marketing (“SEM”)
markets in South Africa. On 17 August 2023, Google submitted a letter to the
Tribunal in response to Lottoland’s correspondence in respect of the Commission’s
OIPMI.
[16] On 25 August 2023, Lottoland submitted a further letter to the Tribunal explaining
the basis upon which the Commission’s market inquiry findings are relevant to
Lottoland’s application for interim relief, in response to its letter dated 10 August
2023 and Google’s letter dated 17 August 2023.
6
[17] On 19 September 2023, the Tribunal requested that Lottoland provide further
written submissions regarding the relevance of the Commission’s final OIPMI
report to the issues to be determined in its application for interim relief. Specifically,
Lottoland was directed to provide submissions on the implications of the
Commission’s findings on Google Ads and access to the Google Ads platform.
17.1. OnOn 28 September 2023, Lottoland submitted its supplementary written
submissions as requested by the Tribunal.
17.2. On 9 October 2023, Google provided its submissions relating to the
Commission’s final OIPMI report.
[18] We have considered these submissions in our assessment.
Lack of urgency
[19] We note that Lottoland had taken some 26 months to file a complaint with the
Commission following Google’s alleged termination of Google Ads to it and more
than three months to launch an interim relief application. Google submitted that
this was an indication of a lack of urgency.14
14
[20] Given the above, we conclude that Lottoland has not made out a case for urgency
in this matter.
Lottoland’s case
[21] Lottoland prefaced its case by explaining that Google Ads enables advertisers to
display advertisements to users who utilise Google search. 1515 One of the most
compelling benefits to advertisers in doing so is the ability to target users based
on certain keyword searches.16
16 For example, Lottoland’s rivals, who allegedly are
permitted by Google to use its Ads Services, can place ‘bids’ to display their
advertisements in the event of users of Google searching for “play lotto”, “play
1414 Letter from Baker Mckenzie addressed to the Tribunal dated 11 April 2024.
1515 Lottoland Heads of Argument, at para 34.
1616 Ibid.
7
lottery”, or “bet lotto”. 1717 Their advertisements will then appear in prominent
positions on the first page of Google’s search results. 18
18 If a user clicks on an
advertisement they are directed to a ‘landing page’ where the advertiser is able to
facilitate their registration as a customer.1919
[22] Lottoland argues that Google has refused to continue supplying Google Ads to
Lottoland in circumstances where there are no alternative suppliers from which
Lottoland can obtain such services, where it is economically feasible for Google to
continue doing so, and where Google supplies the very same services to no less
than seventeen of Lottoland's direct competitors.
[23] Furthermore, Lottoland contends that Google's conduct impedes and / or prevents
Lottoland from participating in and / or expanding within the market that it operates
in, without any countervailing technological, efficiency or other pro-competitive
gains to justify Google’s conduct. It submits that Google's conduct amounts to
prohibited practices in terms of section 8(1)(d)(ii) and / or section 8(1)(c) of the Act.
[24] Lottoland also submits that Google is overwhelmingly dominant both as a search
engine and in the market for SEM services in South Africa.
[25] In Lottoland’s view, as a result of Google's conduct, it has suffered (and continues
to suffer) significant harm. Lottoland contends that while it may in theory be able
toto recover some of its losses by way of a future follow-on damages claim against
Google, the ongoing harm to Lottoland’s ability to use Google Ads (as its rivals do)
to expand its (new) customer base is irreparable. Furthermore, Google’s conduct
irreparably (or at very least seriously) harms competition: by selectively enforcing
its internal “rules”, Google is distorting competition as between Lottoland and its
rivals. This prima facie causes harm to competition and consumers.
[26] Lottoland further argues that the balance of convenience overwhelmingly favours
[26] Lottoland further argues that the balance of convenience overwhelmingly favours
the granting of the interim relief sought and that Google’s claim that doing so places
1717 Lottoland Replying Affidavit, at para 46.
1818 Lottoland Founding Affidavit at para 107; Google Ireland Answering Affidavit at para 2.5.
1919 Google Ireland Answering Affidavit at para 3.4.
8
Google at risk of “potential criminal liability” is misconceived. Lottoland argues that
Google’s claim that supplying Lottoland with access to Google Ads carries with it
the potential for criminal liability (and other unspecified “risk”) is entirely
undermined by the fact – not disputed by Google – that it permits Lottoland’s rivals
to advertise precisely the same services which Google now claims contravene the
Lotteries Act.2020 Lottoland also contends that some of Lottoland’s rivals are even
permitted by Google to use the words “Lottoland” and “Lottoland South Africa” in
their Google advertisements, thereby targeting users who search for Lottoland on
Google.21
21
[27] In addition, Lottoland argues that the reasons given by Google for terminating
Lottoland’s access to Google Ads have changed over time:2222
27.1. Initially, Google stated that Lottoland was prohibited from using Google Ads
because it promoted “ international lotteries on [its] site … which is not
permitted per our South Africa country-specific gambling policy”.
”.2323
27.2. Thereafter, for the first time in its answering affidavit, Google claimed that it
refused Lottoland access to its Ads Services because Lottoland’s business
(namely accepting fixed-odds bets on the outcome of local lotteries)
purportedly contravenes the Lotteries Act.24
24
27.3. Google subsequently stated that Lottoland’s access had been revoked
because Lottoland was allegedly “accepting/taking bets on foreign lotteries,
which is in violation of Sections 57(1) and 57(2) of the Lotteries Act
.2525
Google advised Lottoland to “ remove the international lotteries in order to
be able to advertise the ithuba ones”.
”.2626
2020 Lottoland Founding Affidavit, at para 67; read with Annexure O to the Complaint Memorandum
at Record pp338-386 (see, in particular, the evidence of Lottoland’s rivals using Ads Services
from p352 and following). See also Lottoland Replying Affidavit, at para 43 and following read
with Annexure RA1 at Record pp901-952.
with Annexure RA1 at Record pp901-952.
2121 See Mr Michael Taberner’s report at Record p519.
2222 Lottoland Heads of Argument, at para 8.
2323 Google’s email to Lottoland of 16 September 2020 at Record p269.
2424 First Respondent Answering Affidavit, at para 3.7.
2525 Google’s email to Lottoland of 24 September 2020 referred to in Lottoland’s attorney’s letter at
Record p282.
2626 Google’s email to Lottoland of 6 October 2020 at Record p956.
9
Google’s submissions
[28] In March 2020, Google certified Lottoland to promote online gambling activities on
Google Ads.
[29] Google submits that following the certification and after Lottoland had commenced
running ad campaigns on Google Ads, it detected that its ads did not comply with
its relevant advertising policies. 27
27 It argues that during its periodic compliance
audits of ads running on Google Ads in the months following Lottoland’s
certification,28
28 Google detected that Lottoland’s business, insofar as it promotes
lottery betting in South Africa, contravenes Google’s advertising policies as well as
the Lotteries Act.29
29
[30] For this reason, in September 2020, Google revoked certification of Lottoland’s
website landing page.3030
[31] Google contends that Lottoland’s offering of fixed-odds bets on the outcome of the
national lottery in South Africa contravenes sections 57(1) and 57(2)(g) of the
Lotteries Act. Google also argues that Lottoland’s business allows users to place
fixed-odds bets on the outcome of various lotteries, including the South African
national lottery. This practice allegedly contravenes the Lotteries Act31
31 as Lottoland
does not hold a valid licence to conduct, promote, facilitate, participate in, or derive
any benefit from a lottery. There is a single lottery licence holder in South Africa
authorised to operate a lottery in terms of the Lotteries Act, namely Ithuba Holdings
RF Proprietary Limited (“Ithuba”).
[32] Google submits that in terms of its online advertising policies, which are designed
to protect users, restrictions are placed on the promotion of certain gambling
activities. Of particular relevance, the promotion of lotteries is limited to state-
licensed entities. This restriction is in place to ensure compliance with the
2727 First Respondent Answering Affidavit, at para 6.9.
2828 Google submits that it uses a combination of automated and human evaluation methods to
ensure that ads comply with the advertising policies.
ensure that ads comply with the advertising policies.
2929 First Respondent Answering Affidavit, at para 6.11.
3030 Ibid, at para 6.12.
3131 Ibid, at paras 6.2 and 6.4.
1010
provisions of the Lotteries Act which seek to ensure that, amongst other things, no
schemes may be conducted for the placing of bets on the outcome of unauthorised
lotteries. This prohibits games of risk on the outcome of any lottery. As such, it
argues, this policy is underpinned by the purpose and provisions of the Lotteries
Act.
[33] Google contends that Lottoland has failed to demonstrate prima facie that Google
has engaged in exclusionary conduct that is proscribed by sections 8(1)(d)(ii)
and/or 8(1)(c) of the Act. Google has not engaged in a “refusal to deal” or any
conduct that excludes Lottoland from effectively participating and/or expanding in
the market. On the other hand, it is Lottoland’s business activities that are
proscribed by the relevant law governing lotteries and for this reason, Google has
restricted Lottoland’s use of Google Ads.
Legal framework
[34] The adjudication of interim relief applications is circumscribed in section 49C of the
Act which vests the Tribunal with discretionary power to grant interim orders.
Section 49C(2)(b) states that the Tribunal:
“…may grant an interim order if it is reasonable and just to do so, having regard
to the following factors:
(i) The evidence relating to the alleged prohibited practice;
(ii) the need to prevent serious or irreparable damage to the applicant; and
(iii) the balance of convenience.”
[35] Section 49C(3) of the Act deals with the required standard of proof and states that:
“In any proceedings in terms of this section, the standard of proof required is the
same as the standard of proof in a High Court on a common law application for
an interim interdict.”
[36] It is not our function, in interim relief proceedings, to arrive at a definitive finding of
a contravention. A successful applicant is only required to make out a prima facie
case, not to establish its case on a balance of probabilities. In eMedia the CAC in
1111
relation to section 49C(2) held “This really means that the Tribunal must make a
summary assessment before granting the interim relief. This assessment is only at
a prima face level.”
.”3232 In Sekunjalo, the CAC further confirms that the requirement
of evidence relating to the alleged prohibited practice means prima facie
evidence.3333 In this way interim relief applications under section 49C are analogous
to interim interdict applications in the High Court, where applicants seek relief
pending the determination of some other dispute.
[37] The Tribunal has held that the abovementioned three steps must be understood
holistically with each factor balanced against the other: 3434
“Section 49C confers a discretion on the Tribunal to grant an interim relief having
regard to what is reasonable and just in the circumstances. The three legs of the
inquiry are however considered holistically. Thus, a weak case on say irreparable
harm may be counterweighed by a very strong case on the prohibited conduct.
And vice versa, a weak case on prohibited conduct may be counterweighed by a
strong case on irreparable harm.”35
35
[38] In Nedschroef,
36
36 the Tribunal held as follows:
“… In terms of section 49C(2), the Tribunal no longer has to consider whether
each of the requirements has been established in isolation, but rather looks at all
the factors listed in section 49C(2) as a whole….”
“… The old section required proof of each of the various constituents; the new
starts off by making the threshold requirement that the granting of the order is
3232 eMedia Investments (Pty) Ltd SA v Multichoice (Pty) Ltd and Another Case No.
201/CAC/Jun22 (“eMedia
”), at para 93.
3333 Mercantile Bank, A Division of Capitec Bank Ltd and others v Surve` and others [2023] 3 CPLR
33 (CAC), at para 25.
3434 Natal Wholesale Chemists (Pty) Ltd v Astra Pharmaceuticals (Pty) Ltd and Others Case No.
98/IR/Dec00, at para 34; York Timbers Limited v South African Forestry Company Limited (Case
98/IR/Dec00, at para 34; York Timbers Limited v South African Forestry Company Limited (Case
No. 15/IR/Feb01) (“York Timbers”), at para 13; Anchor Zedo Outdoor CC v Passenger Rail
Agency of South Africa (Case No. 017616), at para 16; and GovChat (Pty) Ltd and Hashtag
Letstalk (Pty) Ltd v Facebook, Inc and Others (Case No. IR165Nov20), at para 160.
3535 GovChat (Pty) Ltd and Hashtag Letstalk (Pty) Ltd v Facebook, Inc and Others (Case No.
IR165Nov20) (“GovChat
), at para 160.
3636 Nedschroef Johannesburg (Pty) Ltd and Teamcor Ltd and Others , Case No. 95/IR/Oct05
(“(“Nedschroef”).
1212
‘reasonable and just’ and then requires that the Tribunal ‘has regard’ to the
constituent factors, not as separate building blocks, but rather as a collective set
of criteria that can be weighed and balanced through the lens of what is
“reasonable and just””.
“[25] The implication of this shift, is that an application may meet the three factors,
but there may be reasons why granting the application is not reasonable and just.
Conversely, an applicant may not make out a strong case on all three of the
factors, but the Tribunal may nevertheless consider that an order for interim relief
is nevertheless reasonable and just following an Eriksen type approach” 37
37
(emphasis added).
[39] The approach to interim relief applications has evolved through the judgments of
the CAC in Business Connexion38
38 and eMedia. Contrary to common law courts
which grant relief to essentially protect private interests, the Tribunal grants relief
that is in the public interest in its mandate to promote competition. In Business
Connexion the CAC held: “The need for intervention is a function of the probability
of serious or irreparable damage occurring, if no intervention is ordered by the
Tribunal before it can make a final determination as to whether the alleged
prohibited practice has taken place. It is the damage to the competitive position of
the applicant that the prohibited practice may cause that marks out this enquiry.
Other forms of damage to the applicant are not relevant because the Act’s purpose
is to maintain and promote competition in the market ”
.3939 Furthermore, we take
guidance from the CAC in eMedia where it held that where non-speculative and
objective evidence strongly points to a prima facie right and it is clear that if there
is a prima facie right (contravention) established with reference to clear and non-
speculative evidence, even where the establishment of that right is open to some
doubt, but there is a well-grounded apprehension of harm – the Tribunal must find
doubt, but there is a well-grounded apprehension of harm – the Tribunal must find
that it favours the granting of the interim relief application.40
40
3737 Nedschroef, at paras 23-25.
3838 Business Connexion (Pty) Ltd. v Vexall (Pty) Ltd and Another Case No. 182/CAC/Mar20
(“(“Business Connexion”)
3939 Ibid, at para 21.
4040 eMedia, at para 80.
1313
[40] The CAC in eMedia4141 also emphasised that “there will inevitably be disputes of fact
but that does not prevent the Tribunal from taking a robust approach nor is it
necessary to await the outcome of an investigation in due course. The finality of
an investigation is perhaps best utilised when considering final relief. In this case
expert reports were filed; facts were placed before the Tribunal which could not
seriously be disputed and at this interim stage, this should have facilitated the
determination of interim relief. The application of an objective standard to the facts
should facilitate an obviously fair decision.” (Our emphasis)
[41] We deal with each of the factors listed in section 49C(2)(b) of the Act in greater
detail below, with the lens that these three factors should be weighed and balanced
to determine what is reasonable and just.42
42
Relevant markets
[42] Lottoland submits that the relevant product markets are (i) the market for gambling,
betting and bookmakers;4343 and (ii) the markets for (a) online search; and (b) SEM
services.4444
[43] In broad terms, according to Lottoland, its business replicates the well-established
practice of licenced bookmakers offering fixed-odds bets on the outcome of
lotteries.45
45 In addition, Lottoland competes with other licensed bookmakers in
South Africa that offer competing fixed-odds bets on the outcome of lotteries.4646
[44] In respect of the markets for online search and SEM, Lottoland submits that
Google’s primary business and product offering is as a search engine. 47
47 SEM
refers to the practice of improving how customers find your product or service on
a search engine (such as Google or Bing) through paid advertising. 48
48 In addition,
4141 eMedia, at para 81.
4242 Competition Law of South Africa, Phillip Sutherland, Lexis Nexis, November 2021, at para
11.6.2, pp11-44.
4343 Lottoland Founding Affidavit, p29.
4444 Ibid, p31.
4545 Ibid, at para 108.
4343 Lottoland Founding Affidavit, p29.
4444 Ibid, p31.
4545 Ibid, at para 108.
4646 Lottoland Founding Affidavit, at para 114; Replying Affidavit, at para 46, p844.
4747 Lottoland Founding Affidavit, at para 119.
4848 Annexure FA1 of Lottoland Founding Affidavit, at para 134.
1414
Lottoland believes that the online journey for persons wishing to play and partake
in online gambling is the same for online shoppers and thus that search, and in
particular, Google Search, is the starting point for most of its would-be customers,
where such customers would, by virtue of Google's strategy and the search engine
results page (“SERP”) arrangements, be confronted first by gambling operators
who make use of Google Ads.49
49
[45] Google is of the view that Lottoland has made a bold statement that “ Google has
a market share of more than 90% of the SEM market, measured by search volume”
without explaining why the “SEM market” is relevant for purposes of this matter
other than an apparent allegation that Google’s “Search Network campaigns”,
which Lottoland made use of, are “a species” of SEM.50
50 Google also contends that
aside from the vagueness of such statements by Lottoland, an analogy between
the alleged markets for search and SEM is misplaced.51
51
[46] Google further submits that Lottoland's own marketing activities demonstrate that
the relevant product market is not limited to online advertising but encompasses
the broader advertising ecosystem in which Google is not dominant and competes
vigorously. This includes offline advertising such as print media, outdoor
advertising, television advertising and radio advertising, which ultimately have the
same objective as online advertising - i.e., reaching as many potential customers
as possible. Therefore, Google is of the view that the broad advertising ecosystem
is the appropriate relevant product market.
[47] In addition, Google submits that Lottoland attempts to rely on Google's alleged
market share in the "market for search engines" as an indication of a "similar"
market share in the market for SEM. It contends that the internet is just one of
several media channels (including offline and online) that can be chosen by
advertisers to promote their products and services. From a demand-side
advertisers to promote their products and services. From a demand-side
perspective, advertisers would, therefore, take all media into account when
planning their advertising campaigns. Substitutability among media channels can
4949 Annexure FA1 of Lottoland Founding Affidavit, at para 140.
5050 Google Heads of Argument, at para 4.14.
5151 Ibid, at para 4.16.
1515
be demonstrated through the growth experienced by online advertising in recent
years, partially at the expense of offline advertising. Similarly, from a supply-side
perspective, a broader market definition that includes all forms of advertising would
be justified by the fact that traditional media publishers as well as major
newspapers and magazines generally offer both online and offline advertising
space.
[48] Google further alleges that the online advertising space is dynamic and crowded.
That is, even if the relevant market is limited to online advertising only, which it
argues is not appropriate in the context of this matter, there are thousands of
companies, large and small, working together and in competition with each other
to provide digital advertising, each with different specialties and technologies.
[49] Google therefore contends that Lottoland has failed to properly define the relevant
market within which it alleges that Google is dominant or set out credible evidence
for Google's alleged dominance in such a market. Google further provided that it
is not appropriate to draw a correlation between Google’s alleged market share in
search and its market share in SEM (or any other market). 5252 Accordingly, that
Lottoland has failed to adequately establish the relevant market in which Google’s
market position should be assessed for purposes of this matter or that Google is
dominant or exercises market power in such a market. 53
53 As such, Lottoland’s
interim relief application should be dismissed on this basis alone.54
54
Our assessment
[50] As previously held by the Tribunal, in order to assess dominance, there must be a
prima facie delineation of the relevant market in which the abuse of dominance is
alleged.55
55
5252 First Respondent Answering Affidavit, at para 7.4.7.
5353 Google Heads of Argument, at para 4.26.
5454 Ibid, at para 4.27.
5555 See, for example, Mlonzi and Another v Eskom Holdings Soc Limited and Another
5555 See, for example, Mlonzi and Another v Eskom Holdings Soc Limited and Another
(IR1360CT22), at paras 22 and 35; Apollo Studios (Pty) Ltd and Another v Audatex SA (Pty) Ltd
and Another (IR198Mar23), at para 65;
Govchat Proprietary Limited and Another v Facebook Inc
and others (IR165Nov20), at para 77.
1616
[51] As stated above, SEM relates to improving how customers find your product or
service on a search engine (such as Google or Bing) through paid advertising.56
56
[52] Market delineation concerning services provided in online markets often is a
complex issue and we take guidance from what has been found in other
jurisdictions. The European Commission (“EC”), in the Google/DoubleClick
merger, found that online advertising constitutes a relevant market. It notes “…
search and non-search advertising might exert some degree of constraint on each
other, especially when considering the advertisers' perspective. From a publisher’s
standpoint, the distinction between the two categories seems to be clearer
” 5757
[53] In the subsequent Microsoft/Yahoo! Search Business merger, the EC left open the
question whether internet search, i.e., the provision of search results to internet
users, constitutes a separate relevant market. 58
58 However, in line with its earlier
merger decision in Google/DoubleClick the EC confirmed that online advertising
constitutes a separate relevant market. 5959 Regarding online advertising it notes
“only one respondent to the market investigation submitted that online advertising
and offline advertising belong to the same product market. The Commission
therefore considers that online advertising is a distinct market from offline
advertising”.”.6060 It further finds that “ Whether segments of that market constitute
relevant markets in their own right can be left open …”.6161
[54] In Google Search (AdSense) the EC found that “
general search services and
online search advertising constitute two different but interlinked sides of a general
search engine platform”.
”.6262 It described online search advertising as involving the
matching by search advertising platforms of user queries with relevant search ads.
On the demand side of this market are internet users and advertisers. On the
5656 Annexure FA1 of Lottoland Founding Affidavit, at para 134.
5656 Annexure FA1 of Lottoland Founding Affidavit, at para 134.
5757 Case No. COMP/M.4731 - Google/DoubleClick, 11 March 2008, at para 56.
5858 Case No. COMP/M.5727 - Microsoft/Yahoo! Search Business, 18 February 2010, at paras 86
and 87.
5959 Ibid, at para 87.
6060 Case No. COMP/M.5727 - Microsoft/Yahoo! Search Business, 18 February 2010, at para 61.
6161 Ibid, at para 87.
6262 EC Case AT.40411 (20 March 2019) - Google Search (AdSense), at para 121. Accessible here:
https://ec.europa.eu/competition/antitrust/cases/dec_docs/40411/40411_1619_11.pdf.
1717
supply side are the operators of search advertising platforms. 6363 It further stated
that an online search advertising platform requires at least three elements: (i) a
general search service to match user queries with general search results; (ii) the
technology to match user queries with relevant search ads; and (iii) an advertiser
base that is large enough to compete effectively against other search advertising
platforms.64
64 It concluded that the market for online search advertising constitutes
a distinct product market. Offline and online advertising belong to different product
markets. The same is true for online search advertising and online non-search
advertising and for online search advertising and paid specialised search results.6565
It again confirmed that offline and online advertising are not substitutable.6666
[55] It further found that the success of online search advertising “depends also on the
reach and performance of the underlying general search service ”.
”.6767 It explained
that the higher the number of users of a general search service, the greater the
likelihood that a given online search ad is matched to an interested user and
eventually converted into a click. Internal Google documents and a statement by
Google confirmed this. 6868 This suggests that functionally there are separate but
inter-related markets for search, and SEM or search advertising.
[56] On appeal to the General Court (“EU General Court”), 69
69 the EU General Court
upheld the majority of the EC’s findings on market definition for the market for
online search advertising and the market for online search advertising
intermediation by stating “It follows from the foregoing considerations that Google’s
line of argument does not manage to call into question the accuracy, reliability and
consistency of the items of evidence on which the Commission relied in its overall
assessment of the substitutability of online search ads and online non-search ads,
assessment of the substitutability of online search ads and online non-search ads,
or to demonstrate that that institution failed to take into account evidence relevant
to that end. Accordingly, Google does not demonstrate that the Commission
6363 Google Search (AdSense), at para 121.
6464 Ibid, at para 122.
6565 Ibid, at para 123.
6666 Ibid, at para 125.
6767 Ibid, at para 251.
6868 Ibid, at para 251.
6969 Judgment of the General Court of 18 September 2024 – Google and Alphabet v Commission
(“(“Google AdSense for Search”
), (Case T-334/19).
1818
erroneously considered that the two types of ad at issue were not substitutable.”7070
In addition, the EU General Court affirmed the EC’s finding that the market for
online search advertising constitutes a distinct product market.7171
[57] In the monopoly trial involving Google in the U.S., Google was alleged to have
abused its monopoly power to control the search engine business. In this matter,
it was observed that “ Google monetizes this search monopoly in the markets for
search advertising and general search text advertising, both of which Google has
also monopolized for many years
7272, reiterating, as found by the EC, that the
markets for general online search and for search advertising are distinct but directly
related. It explains that Google uses consumer search queries and consumer
information to sell advertising. It notes “In the United States, advertisers pay about
$40 billion annually to place ads on Google’s search engine results page (SERP).
It is these search advertising monopoly revenues that Google “shares” with
distributors in return for commitments to favor Google’s search engine. These
enormous payments create a strong disincentive for distributors to switch. The
payments also raise barriers to entry for rivals—particularly for small, innovative
search companies that cannot afford to pay a multi-billion-dollar entry fee. Through
these exclusionary payoffs, and the other anticompetitive conduct …, Google has
created continuous and self-reinforcing monopolies in multiple markets ”
”7373
[58] The Amended Complaint brought against Google identifies that general search
services in the U.S. constitutes a relevant antitrust market 74
74 (also distinct from
offline advertising); and that a separate relevant market exists for search
advertising.75
75 The latter comprises all types of ads generated in response to online
search queries, including general search text ads (offered by general search
7070 Google AdSense for Search at para 305.
7171 Ibid, at paras 222 and 367.
7070 Google AdSense for Search at para 305.
7171 Ibid, at paras 222 and 367.
7272 United States of America v. Google LLC (1:20-cv-03010), at para 7. Accessible here:
https://www.justice.gov/atr/case-document/file/1428271/dl.
7373 United States of America v. Google LLC (1:20-cv-03010), at para 7. Accessible here:
https://www.justice.gov/atr/case-document/file/1428271/dl.
7474 General search services allow consumers to find responsive information on the internet by
entering keyword queries in a general search engine such as Google, Bing, or DuckDuckGo.
7575 United States of America v. Google LLC (1:20-cv-03010), at paras 88 and 97. Subsequently
confirmed in United States of America et al., Plaintiffs, v. Google LLC, Defendant, Case No. 20-
cv-3010 (APM) / State of Colorado et al., Plaintiffs, v. Google LLC, Defendant Case No. 20-cv-
3715 (APM).
1919
engines such as Google and Bing).76
76 Furthermore, general search text advertising,
comprising ads sold by general search engines, typically placed just above or
below the organic search results on the SERP as ‘sponsored’ ads, constitute a
separate relevant market “wholly contained within the broader search advertising
market”.
”.7777 However, it notes clearly that other forms of online ads on social media
or display ads do not enable the same targeting of consumers in response to a
specific search query and are generally aimed at consumers who are further from
the point of purchase. As Google’s Chief Economist explained: “ One way to think
about the difference between search and display/brand advertising is to say that
‘search ads help satisfy demand’ while ‘brand advertising helps to create demand’”
and “[d]isplay and search advertising are complementary tools, not competing
ones.”
.”7878
[59] We are guided by the case law referred to above, which indicates that online
search advertising or SEM (such as Google’s Ads Services) constitutes a distinct
relevant market, which is separate albeit inter-related with the market for general
online search. There are no facts in this case to suggest that this distinction is not
applicable in South Africa, and we assess the matter in relation to separate but
inter-related prima facie relevant markets for online search and SEM.
[60] Regarding a broader advertising market, we are not persuaded by Google’s
argument that the relevant product market encompasses the broader advertising
ecosystem and is not limited to online advertising. In Google/DoubleClick
7979 the EC
explained that:
“…“…This broad market definition cannot be accepted, primarily because the market
investigation revealed that offline and online advertising are perceived as
separate markets by the majority of respondents. Furthermore, online
advertising is used for specific purposes. As opposed to offline advertising,
advertising is used for specific purposes. As opposed to offline advertising,
online advertising is considered to be capable of reaching a more targeted
audience in a more effective way. Advertisers can precisely target their
7676 United States of America v. Google LLC (1:20-cv-03010), at para 97.
7777 Ibid, at para 101.
7878 Ibid, at para 99.
7979 Google/DoubleClick, at para 45.
2020
audience by combining information regarding geographical location, time of day,
areas of interest, previous purchasing record of the user and search
preferences. This option is not available in the case of offline advertising… In
addition to this specific targeting, respondents to the market investigation noted
that online advertising has a unique reporting system that enables the advertiser
to check exactly how many users have viewed the ad or clicked on it, moreover
allowing a rapid "retargeting" of the ad. Hence the measurement of the
effectiveness of online ads can also be more precise compared with the
traditional measurement systems used in offline advertising.”
[61] Lottoland explained that although it utilises other forms of paid advertising (both
online and offline), SEM is critical to engage with and acquire new customers who
utilise Google in the first instance to search for fixed-odds betting offerings. To
demonstrate the value of Google Ads to its business, Lottoland provided evidence
of significant growth in its customer base and acquisition of new registrations
during the period when it utilised Google Ads, which we discuss further below.
[62] Furthermore, the case law provides that offline advertising is generally different in
its effect and targeting from search advertising and online advertising. Ads
Services, as Lottoland has argued, is effective as an SEM or ‘pay-per-click’ service.
It allows advertisers to reach customers that follow a distinct and likely common
customer journey that is not the same as for offline advertising or display
advertising (where there is no customer query by means of a search engine), as
the Commission has found in its OIPMI. There prima facie appears to be no
significant substitute services available in the market.80
80
[63] Given the above, we consider the allegations brought by Lottoland in respect of
the prima facie relevant market for SEM services, and the inter-related market for
online search.
online search.
8080 Lottoland Heads of Argument, at paras 32.7 and 37.2.
2121
Analysis of the alleged case for interim relief
[64] Lottoland’s theory of harm in this case in essence is that, because of Google’s
dominance in the SEM market, its refusal to supply Lottoland access to Google
Ads while supplying access to Lottoland’s rivals distorts competition in the market
that Lottoland operates in and that this conduct harms it and deprives consumers
of choice. Google, as indicated above, disputes this.
[65] We turn to consider the relevant legal framework for the alleged prohibited
practices and whether Lottoland has prima facie satisfied the elements of section
8(1)(d)(ii) and/or 8(1)(c) of the Act.
[66] The provisions of section 8 of the Act are limited to conduct by a dominant firm,
and we assess Google’s alleged dominance in the prima facie relevant markets.
Section 8(1)(d)(ii)
[67] Section 8(1)(d)(ii) provides that it is prohibited for a dominant firm to refuse to
supply scarce goods or services to a competitor or customer when supplying those
goods or services is economically feasible.
[68] Prior to the 2018 amendments,81
81 section 8(1)(d)(ii) only prohibited a dominant firm
from refusing to supply scarce goods to competitors The amendments have
extended the ambit of the prohibition to include the supply of scarce goods or
services to a competitor or a customer. 82
82 As the Tribunal has held in GovChat,
8383
the amendments to the Act have resolved any uncertainty about the approach
taken by the Tribunal in SAA as the prohibition now also includes a refusal to
supply a “customer” of the dominant firm.
8181 Competition Amendment Act No. 18 of 2018 (published under Government Notice No 644 in
Government Gazette No 42231 on 14 February 2019).
8282 This portion of section 8 came into effect from 12 July 2019.
8383 GovChat (Pty) Ltd and Hashtag Letstalk (Pty) Ltd v Facebook, Inc and Others (IR165Nov20)
(“GovChat”), at para 104.
2222
[69] The requirement of a substantial anti-competitive effect is met either (i) if there is
“evidence of actual harm to consumer welfare ” or (ii) “
if the exclusionary act is
substantial or significant in terms of its effect in foreclosing the market to rivals ”.
”.8484
Since a refusal to supply is a rule of reason prohibition, the anti-competitive effects
can be established by harm to consumer welfare evidenced by facts and
inferences from proven facts. The anti-competitive effects of foreclosure must also
be substantial.8585
[70] Under section 8(1)(d), once the elements of section 8(1)(d) are satisfied the
competitive harm is presumed and the onus shifts to the respondent to
demonstrate that the effects are outweighed by pro-competitive gains. If the
respondent does not, then the conduct will be found to be an abuse. In SAA the
CAC explains this as follows “ We find that as a matter of law if the Commission
proves that SAA's conduct “requires or induces a customer not to deal with a
supplier” then it has proved an exclusionary act. It is not necessary for the
Commission to go on to prove that the conduct “impedes or prevents a firm from
entering into, or expanding within, a market”. This is consistent with our finding in
Patensie where we held that section 8(d) does not require the showing of an
exclusionary effect: “However, as already noted, in terms of Section 8(d) the
complainant does not have to establish that the act complained of has an
exclusionary effect, that is, that it prevents a firm from expanding in the market - if
it is established that one of the acts specified in the various sub-clauses of Section
8(d) has been perpetrated and that the perpetrator is dominant, then the
exclusionary nature of the act is presumed ....”.”8686
[71] However, under section 8(1)(c), which we deal with next, an applicant or
complainant must show the elements of the exclusionary conduct as well as the
effects.8787
complainant must show the elements of the exclusionary conduct as well as the
effects.8787
8484 Competition Commission and South African Airways (Pty) Ltd (18/CR/Mar01) [2005] ZACT 50
(28 July 2005) (“SAA”).
8585 GovChat at para 142.
8686 SAA at para 105.
8787 SAA at paras 134 and 135.
2323
Section 8(1)(c)
[72] The prohibition in section 8(1)(c) is directed against anti-competitive behaviour
generally and is considered the “catch-all” provision to protect against abuses of
dominance.8888
[73] Section 8(1)(c) provides that it is prohibited for a dominant firm to engage in an
exclusionary act – other than a type of “named” exclusionary act listed in section
8(1)(d) – if the anti-competitive effect of that act outweighs its technological,
efficiency or other pro-competitive gain. An exclusionary act is defined as “an act
that impedes or prevents a firm from entering into, participating in or expanding
within a market”.
”.8989
[74] An applicant/complainant in a section 8(1)(c) case bears the onus of demonstrating
the anti-competitive effect of the conduct which can be demonstrated through
evidence of harm to consumer welfare or the foreclosure in the market, and which
can be based on reasonable inferences from proven facts. 90
90 In terms of section
8(1)(c) we then consider whether the anti-competitive effect outweighs any
efficiency justification for the conduct. If it does, we can find that there has been
an abuse of dominance. Here the onus is on the applicant/complainant.91
91
Is there prima facie evidence relating to the alleged prohibited practice?
Dominance
[75] As indicated above, both sections 8(1)(c) and 8(1)(d)(ii) of the Act require a
showing of dominance.
[76] Section 7 of the Act provides that:
“A firm is dominant in a market if –
8888 Competition Commission v Media 24 (Pty) Ltd 2019 (5) SA 598 (CC) (“Media 24”), at paras 12
and 63.
8989 Section 1(1) of the Act.
9090 SAA, at para 132; Computicket (Pty) Ltd v Competition Commission of South Africa
(170/CAC/Feb19), at paras 18-19; Media 24, at para 76.
9191 SAA, at para 134.
2424
(a) it has at least 45% of that market;
(b) it has at least 35%, but less than 45%, of that market, unless it can show that
it does not have market power; or
(c) it has less than 35% of that market, but has market power”.
[77] The term “market power
is defined in section 1 of the Act as “
the power of a firm
to control prices, to exclude competition or to behave to an appreciable extent
independently of its competitors, customers or suppliers
.
[78] Lottoland argues that Google is a de facto monopolist in the general search market,
and that it is also a dominant firm in the SEM market.9292 It submits that Google has
a market share of more than 90% in the SEM market, measured by search
volume.9393 In addition, Lottoland submits that Google’s dominance as a provider of
SEM services is well-established as:9494
78.1. The Commission has stated that Google is “the monopoly provider of intent-
based marketing and customer acquisition in SA, as with many other
markets
;9595
78.2. The United Kingdom’s Competition and Markets Authority (“CMA”) has
stated that advertisers are “heavily reliant on Google as a key source of user
traffic and do not have alternatives ”
9696, and that Google has significant and
enduring market power in general search;97
97 and
78.3. The Autorité de la Concurrence recently found that Google has a share of
the online search advertising market in France exceeding 90% and
concluded that there are a number of “ extraordinary
characteristics of
Google Ads which mean that the inconsistent or discriminatory treatment of
9292 Lottoland Heads of Argument, at para 55.1.
9393 Founding Affidavit, at para 14.
9494 Lottoland Heads of Argument, at para 6.
9595 Complaint Memorandum, at para 146, Record p95.
9696 CMA’s Online Platforms and Digital Advertising Market Study, 1 July 2020 (‘the UK CMA
report’), at para 3.141, p111, accessible at: https://www.gov.uk/cma-cases/online-platforms-and-
digital-advertising-market-study#final-report.
9797 UK CMA report, at para 3.146, p112.
2525
advertisers by Google can “potentially harm competition in the downstream
markets in which the advertisers operate”.”.9898
[79] Google argues that it does not show ads on the vast majority of search queries. In
fact, on average over the past four years, 80% of searches on Google have not
had any ads at the top of search results. Further, only a small fraction of searches,
namely less than 5%, currently have four top text ads. Accordingly, it is not
appropriate to make a correlation between Google’s alleged market share in
search and its market share in SEM (or any other market), and that Lottoland has
failed to adequately establish that Google is dominant or exercises market power
in such a market.
[80] Furthermore, Google submits that by Lottoland's admission, during the period in
which it used Google Ads, namely between March and September 2020, it spent
significantly less on Google Ads than on other advertising channels. Notably,
during the period, Lottoland only spent % of its advertising budget on Google
Ads. The remaining % was spent on Facebook advertising, direct customer
engagement (including SMS), online paid articles and " other advertising
channels".
".9999 Therefore, Google submits that it is not dominant in the broad
advertising ecosystem.
Our assessment
[81] The CAC in eMedia100 noted that context matters. In this matter one needs to
consider the inter-relationship between Google’s activities as a provider of online
search and SEM services, as discussed below.
9898 Complaint Memorandum (quoting from the French Competition Authority’s finding in Decision
19-D-26 of 19 December 2019), Record pp103-104, accessible at:
https://www.autoritedelaconcurrence.fr/en/decision/regarding-practices-implemented-sector-
online-search-advertising-sector and which finding was confirmed by the Paris Court of Appeal in
Décision n° 15-D-13 du 9 Septembre 2015, accessible at
https://www.autoritedelaconcurrence.fr/sites/default/files/commitments//15d13.pdf.
https://www.autoritedelaconcurrence.fr/sites/default/files/commitments//15d13.pdf.
9999 Lottoland Founding Affidavit, at para 34.
100 eMedia, at para 102.
2626
[82] We note that an assessment of a firm’s dominance is almost always done with
reference to the market within which it functions. 101
The CMA has published a
report following its Online Platforms and Digital Advertising Market Study in which
it states that “ Google has significant market power in search advertising. It
accounts for over 90% of search advertising revenues and faces limited
competitive constraints from other forms of advertising”.
”.102
[83] In addition, the Autorité de la Concurrence has found that Google is
overwhelmingly dominant in the “ online search advertising market
”, and that “
the
vast number of searches conducted using Google's search engine increases the
search engine's attractiveness to internet users, but also makes the Google Ads
services more attractive to advertisers, who need to ensure their ads reach a very
large audience”.
”.103
[84] In South Africa, the Commission has found in its final OIPMI report that “ Most
online search, travel and shopping journeys for goods and services start on general
search, the entry point for most consumers to the Internet. General search leads
are considered particularly valuable to platforms because they are intent-based.
Google Search is a de facto monopoly, accounting for over 90% of all general
search across desktop, tablet and mobile devices. Given its importance for
customer acquisition, visibility on the Google search is critical and impacts on
discoverability and website traffic”.”.104 (our emphasis) The Commission further says
the following:
“Given the importance of Google Search for customer acquisition, visibility on the
SERP is a critical component for intermediation platforms as it has an impact on
discoverability and website traffic. On Google Search itself, ranking matters as
101 See the definition of market power in section 1(1) of the Act and the decision of the CAC in
Babelegi Workwear and Industrial Supplies CC v The Competition Commission of South Africa
Babelegi Workwear and Industrial Supplies CC v The Competition Commission of South Africa
(186/CAC/JUN20) [2020] ZACAC 7 (18 November 2020).
102 UK CMA report, accessible at: https://www.gov.uk/cma-cases/online-platforms-and-digital-
advertising-market-study#final-report at para 5.371, pp211 and 307.
103 The summary of the French Competition Authority’s Decision 19-D-26 of December 19, 2019,
accessible here: https://www.autoritedelaconcurrence.fr/en/decision/regarding-practices-
implemented-sector-online-search-advertising-sector at para 163, Record pp 101-102.
104 Competition Commission of South Africa Online Intermediation Platforms Online Market
Inquiry, final report and decision dated July 2023, p5.
2727
consumers show a predisposition to click on the first results assuming they are
most relevant to the query
”105
[85] Google contends that one cannot simply directly impute a firm’s market share in
one market (in this case its market share in relation to general search) to represent
its market share in another market (i.e., the SEM market). However, as indicated
above, these markets clearly are inter-related, which establishes a basis for an
inference to be made, and we are compelled by the significance of Google’s market
share in search.
[86] Google has been shown to be dominant and/or have market power in search and
search advertising by authorities in various other jurisdictions. Taberner claims that
Google is the most used search engine in South Africa with over 90% market
share. The report goes on to state that globally Google has a market share in the
‘SEM/PPC’ (pay per click) market of 28%, a figure which is claimed to be at least
40% in South Africa106
. We have not seen compelling evidence to the contrary or
to show that this is somehow not the case in South Africa, although Google argued
that this statement is misplaced.107
[87] Since the markets for general search and SEM are inter-related, and to the extent
that SEM activity derives inextricably from the search engine capability of providers
such as Google, it is likely, in our view, that on a prima facie basis such a lead
search engine would prima facie have market power in the related SEM market.
[88] Furthermore, a large number of bookmakers use Google Ads and/or SEM as an
important channel to market to new customers (Lottoland’s marketing expert
claims that 15 of the 20 largest bookmakers measured by annual traffic use Google
Ads108
). This fact is not contested.
109 Even in instances where these operators also
make use of other channels for marketing, as with Lottoland, it is likely that there
is a degree of complementarity between channels.
is a degree of complementarity between channels.
105 Competition Commission of South Africa Online Intermediation Platforms Online Market
Inquiry, final report and decision dated July 2023, at para 36.
106 Lottoland Founding Affidavit, Annexure Q, p519.
107 Google Answering Affidavit, at para 7.4.7, p26.
108 Lottoland Founding Affidavit, at para 128, p34.
109 Google Ireland Answering Affidavit, at para 7.4.38, p34.
2828
[89] Our prima facie
view is that Google Ads is likely to be dominant (by virtue inter alia
of Google’s market power in the inter-related market for search) in instances where
consumers search online to identify a specific bookmaker or gambling offering.
That is, for a specific customer journey, as identified in the Commission’s OIPMI,
wherein the customer uses search as their entry point, Google is the predominant
search alternative in South Africa. This is more significant when taking into account
the evidence presented in the Taberner (marketing specialist) report for
Lottoland110
, that bookmakers reviewed in South Africa generally do not have
physical premises and customers interact with them primarily through the internet.
[90] Google does not seem to dispute that one of the primary means by which
customers look up a service provider or gambling offering is through its search
platforms, with visibility of specific providers enhanced by SERP and placement on
Google Ads. It simply argues that there are other channels available as well without
further evidence or elaboration.111
[91] As indicated above, Google contends that other marketing channels such as offline
advertising (including print media, outdoor advertising and television) comprise the
broader (undefined) ‘advertising ecosystem’ that should form part of the relevant
product market, such that it is not dominant. We have already concluded that we
are not persuaded by Google’s argument that the relevant product market
encompasses the broader advertising ecosystem. In addition we note that while a
consumer may have sight of a Lottoland billboard or poster, or an advert on
television or radio, logically it is likely in our view that the customer, once he/she is
aware of the brand and offering, may go on to search for Lottoland’s website or a
specific gambling product online (and indeed, mostly using Google Search) given
a large number of bookmakers are primarily based online.
a large number of bookmakers are primarily based online.
[92] The trends identified by Google in its submissions regarding the growth of online
advertising partly at the expense of offline advertising in recent years seem to
110 Lottoland Founding Affidavit, Annexure Q, “Search Engine Marketing, Google and Online
Gambling Research Report”, Record p519.
111 Google Ireland Answering Affidavit, pp28-29.
2929
reflect a general trend in consumer and marketing behaviour over time as
consumers access markets through digital means (as is evident in newspaper or
airline ticket buying markets).
[93] We accordingly find that Google on a prima facie basis is a dominant firm in the
search and SEM markets in South Africa.
Section 8(1)(d)(ii): Is there a refusal to supply a customer?
[94] It is common cause that Lottoland is a customer of Google.
[95] Lottoland submits that Google is refusing Lottoland access to Google Ads while
simultaneously providing access to this service to Lottoland’s rivals, and that
Google has not only proffered inconsistent reasons for its enforcement of its
“internal policies as against Lottoland, but it has also enforced these policies
selectively in the market in which Lottoland operates.
[96] Lottoland also disputes Google’s alleged justification for its refusal to supply
Lottoland with access to its Google Ads on the basis that Lottoland allegedly
contravenes the provisions of the Lotteries Act.
[97] Google has argued that it has not terminated Lottoland’s access to Google Ads but
that it has only refused use of the website https://www.lottoland.co.za/ as a landing
page for advertisements, as the website contains content that contravenes both
Google’s internal policies and the Lotteries Act. 112
Furthermore, according to
Google, Lottoland’s website continues to appear in organic search results and
Lottoland is free to apply Search Engine Optimisation (“SEO”) strategies to
improve its ranking on the SERP. From Google’s perspective, SEO is not
dependent on the use of Google Ads and claims it has repeatedly provided: (i)
reasons to Lottoland explaining the basis upon which its website (the intended
landing page) does not comply with Google’s policies; and (ii) instructions on the
steps that Lottoland can take to rectify the non-compliance, thereby enabling
112 Google Heads of Argument, at para 4.33.
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further use of Google Ads. That is, Lottoland still has access to Google Ads and
could advertise in a manner compliant with Google’s policies and South African
laws regarding lottery advertising.113
[98] In this regard, Lottoland contends that Google contradicts itself when it submits
that Google has merely suspended and/or restricted a landing page that violates
Google’s policies and the Lotteries Act, as Google has stated that in order to use
Google Ads Lottoland must comply with Google’s advertising policies and
applicable laws and that ad campaigns that violate these policies and applicable
laws will not be permitted to run.114
[99] In general, we note that the concept of a refusal to supply includes not only
situations in which there is an actual refusal to supply but also situations in which
there is a ‘constructive’ refusal to supply (for example, situations in which the
dominant firm makes a supply offer on unreasonable terms).115
[100]The category of conduct in which “a firm refuses to supply scare goods or services
to a competitor or customer when supplying those goods or services is
economically feasible” encompasses several distinct fact patterns, and of which
there are variations.116
The standard fact pattern involves a category of refusals to
supply which in economics are called “vertical refusals to supply” and include
situations in which the dominant firm: (1) refuses to supply inputs to firms who are
in competition with its own downstream business, i.e., (downstream) competitors;
or (2) refuses to supply downstream firms with whom it does not compete, i.e.,
customers.117 We have above emphasised the amendments to section 8(1)(d) of
the Act that now includes reference to a customer.
[101]Lottoland’s argument is that of a vertical refusal to supply a customer downstream
with an upstream input.
113 Google Ireland Answering Affidavit, at para 3.4
114 Google Heads of Argument, at para 4.36.
114 Google Heads of Argument, at para 4.36.
115 Competition Commission v Telkom SA Ltd (Case No. 11/CR/Feb04, dated 7 August 2012)
[2012] 2 CPLR 334 (CT); and eMedia Investments (Pty) Ltd v Multichoice (Pty) Ltd and The
Competition Commission (IR194Mar22) (“eMedia
(Tribunal)”), at para 91.
116 eMedia (Tribunal), at para 104.
117 Ibid, at para 105.
3131
[102]We note that Google previously made Google Ads available to Lottoland until
September 2020 and Lottoland has repeatedly attempted to have this access
reinstated.
[103]Google’s claim that supplying Lottoland with access to Google Ads carries with it
the potential for criminal liability and other commercial risks is undermined by the
fact that it permitted a number of Lottoland’s competitors to advertise the same or
similar services which Google claims contravene the Lotteries Act. This was not
disputed by Google as it admitted that it is in the process of terminating the relevant
advertisers’ use of Google Ads through landing pages that contravene Google’s
policies.118 It is not clear to us why some providers are refused access and others
are not, other than Google’s admission that there is “ slippage
” arising from a
mechanised classification system that is meant to detect problematic websites.119
[104]In this regard, although we do not go into the details of the Hartley affidavit filed on
behalf of Google Ireland, it suffices to note its conclusion, and statements made in
the hearing. Google stated that it was in the process of terminating the relevant
advertisers’ use of Google Ads where some of their websites contained landing
pages that contravened Google’s policies (identified following an eventual internal
investigation based partly on the list of competitor websites that Lottoland had put
forward).
[105]Regarding Google’s defence, we note that there is pending litigation before the
Western Cape High Court regarding the lawfulness of Lottoland’s lottery betting
business, in light of the Lottostar decision of the Mpumalanga High Court. 120
For
our purposes, there is doubt regarding the interpretation and legality of Lottoland’s
own offering (rather than Lottostar’s), also evidenced by the series of
correspondence referred to above between the parties in which Google’s position
has changed over time. This is at the heart of Google’s grounds for restricting
has changed over time. This is at the heart of Google’s grounds for restricting
Lottoland’s access to Google Ads. It is also significant that the Lottostar judgment
118 Google Ireland Supplementary Answering Affidavit, at para 2.5.
119 Ibid, at para 2.4.
120 Lottoland Founding Affidavit, Annexure FA2; Memorandum, at para 73.
3232
on which Google relies was handed down in August 2021, approximately a year
after Google first restricted Lottoland’s access to its Google Ads service. That is,
its initial decision to deny access was taken prior to the judgment on which it relies
in support of its decision and so it relies on its internal policies and interpretation
of the relevant laws and then appears to apply this interpretation asymmetrically in
the market.
Scarce goods or services
[106]Lottoland and Google have differing views on whether Google Ads is a scarce
service.
[107]Lottoland argues that Google Ads is plainly a scarce service in the sense
contemplated in section 8(1)(d)(ii) of the Act as there is no feasible substitute for
Google Ads to advertise via Google’s search platform and that the UK CMA has
said so.121 Thus, Lottoland argues that Google Ads “ cannot be easily duplicated
without significant capital investment and therefore can be considered as ‘scarce’
or hard to come by as the Tribunal found in
GovChat
122
[108]As noted above, Google argued that there are numerous alternatives to Google
Ads, including both online and offline advertising channels, all of which are viable
alternatives and exercise a significant competitive constraint on Google Ads.123
In
particular, Google submitted that:
108.1. Lottoland uses numerous viable alternative advertising mediums in the
relevant period, and it only spent % of its advertising budget on Google
Ads;124
108.2. Lottoland provided that Google Ads accounted for around % of its new
customer registrations during the relevant period and that the customers
who were directed to Lottoland by Google Ads contributed around % of
121 UK CMA report, at para 5.23, p217.
122 Lottoland Heads of Argument, at para 55.2. Also see GovChat, at para 108.
123 Google Heads of Argument, at para 4.53.
124 Lottoland Founding Affidavit, at para 34.
3333
its First Time Deposit Gross Gambling Revenue during the period (Google
emphasised that it has not been established that new customer
registrations, in and of themselves, are the appropriate proxy for effective
participation in a market);125 and
108.3. These metrics demonstrate that Google Ads was not the most significant
contributor to Lottoland’s alleged new customer registrations or spend by
these new customers but is, most importantly to sustain a “scarce
goods/services” case, one of many providers of advertising services.
[109]As indicated in eMedia,126 the question of whether a good or service can be
considered scarce requires us to consider whether i) it is impossible or prohibitively
expensive to duplicate the service, (and therefore the cost of duplicating the
alleged service constitutes a barrier to entry) or ii) there are effective substitutes
for the service. In other words, there must be actual or potential real viable
alternatives to the dominant firm’s service that customers in the downstream
market (in this case Lottoland) can rely on or it must be easy to duplicate the
service in question without significant capital investment.
[110]Whether Google Ads should be viewed in the lens of a ‘scarce service’ as
contemplated in section 8(1)(d)(ii) of the Act is context specific. In GovChat, the
Tribunal found that where goods or services “ cannot be easily duplicated without
significant capital investment” they can be considered as ‘scarce’ or hard to come
by.127 SEM services in our view cannot be easily duplicated without significant
capital investment.
[111]In Audatex, the Tribunal noted that scarcity relates to an insufficient availability in
the market of the relevant services that are being provided by the dominant firm.128
125 Lottoland Founding Affidavit, at paras 36 and 37, Record p12.
126 eMedia (Tribunal), at para 129.
127 GovChat, at para 113.
128 Apollo Studios (Pty) Ltd and Another v Audatex SA (Pty) Ltd and Another (IR198Mar23), at
para 81.
3434
[112]The context to be noted around Google Ads is inter alia informed by the finding of
the Commission in its final OIPMI report that “ Given its importance for customer
acquisition, visibility on the Google search is critical and impacts on discoverability
and website traffic”129 and the statement by the UK CMA that Google’s “rivals face
significant barriers to attracting advertisers, in addition to the barriers on the
consumer side. Google’s market power has allowed it to charge higher prices to
advertisers than its competitors. On a like-for-like basis, Google’s prices are on
average [30-40]% higher on desktop and [30-40]% higher on mobile than those of
Bing”
130
[113]In Google AdSense for Search , the EU General Court notes that Google in its
appeal did not dispute the EC’s finding in respect of characteristics of the market
that reinforce market power in online search advertising.
131 Specifically, it was not
disputed that “there were numerous barriers to entry and expansion in the market
for online search advertising intermediation in the EEA. In that regard, it stated,
inter alia, that significant investments were required in order to establish, maintain
and refine a ‘search advertising platform’ and that the online search advertising
intermediation market was characterised by network effects. It noted that the
success of an intermediary depended on the number of advertisers and publishers
that it could attract as well as the size of its portfolio of online search ads. Thus,
the greater the number of advertisers that used an online search advertising
intermediation service, the more ads related to those searches the intermediary
could choose from and thus increase the relevance of the ads that it served in
response to a user’s query.”
132
[114]In this context, we are persuaded by Lottoland’s argument that even though it
utilises other forms of paid advertising (both online and offline), it has shown from
utilises other forms of paid advertising (both online and offline), it has shown from
its own experience in 2020 that SEM is critical to engage with to acquire new
customers who utilise Google in the first instance to search for fixed-odds betting
129 Competition Commission of South Africa Online Intermediation Platforms Online Market
Inquiry, Final Report and Decision dated July 2023, p5.
130 UK CMA report, p211, accessible here: https://www.gov.uk/cma-cases/online-platforms-and-
digital-advertising-market-study#final-report.
131 Judgment of the General Court of 18 September 2024 – Google and Alphabet v Commission
(Case T-334/19), at para 405.
132 Ibid, at para 403.
3535
offerings. In particular, in the six-month period in which Lottoland utilised Google’s
Ads, Lottoland has submitted that it grew its customer base by an average of
new customers per month. This dropped-off significantly to new registrations
per month when Google terminated Lottoland’s ability to place ads terminating on
its landing page using Google Ads. 133 Therefore, Lottoland using other online
platforms, such as Facebook, appears to speak to a degree of multi-channel
marketing and complementarity rather than outright substitutability particularly
given rapid advances in digital technology and advertising as noted above. In any
event, the widespread use of Google Ads and search by bookmakers in South
Africa suggests that Google Ads offers a unique value to these advertisers when
customers search for a specific service or offering and that, along with other
channels, it is an important additive channel for marketing for the firms to reach
consumers that follow a particular online journey.
[115]The findings of the CMA 134 and Commission 135
show customer preference for
Google search; that there is no feasible substitute for Google Ads or visibility when
advertising via Google’s search platform for customer acquisition as Google’s
rivals likely face significant barriers to attracting advertisers; Google Ads is a
service which cannot be easily replicated by Google’s competitors; and that
customer objective considerations render their choice to use Google Ads likely
given the predominance of Google Search
[116]Given the above, we conclude that Google Ads can prima facie be considered as
a scarce service.
Economic feasibility
[117]Lottoland argues that it is clear that the supply to Lottoland of access to Google
Ads is economically feasible for Google as Lottoland seeks nothing more than
equitable access with its rivals, which currently utilise Google Ads. Google’s claim
133 Lottoland Replying Affidavit, para 101 and Lottoland Heads of Argument, at paras 32.7 and
37.2.
37.2.
134 UK CMA report, accessible at: https://www.gov.uk/cma-cases/online-platforms-and-digital-
advertising-market-study#final-report at para 5.371, pp211 and 307.
135 Competition Commission of South Africa Online Intermediation Platforms Online Market
Inquiry, final report and decision dated July 2023, at para 36.
Ads, Lottoland has submitted that it grew its customer base by an average of
3636
that this presents certain potential risks is belied by the fact that it continued to
supply access to Lottoland’s rivals, and moreover does so despite being advised
many months ago that these competitors were being allowed to do precisely what
Google has refused to permit Lottoland to do.136
[118]Google submits that it is not economically feasible to require it to display non-
compliant and unlawful advertising and submits that contrary to Lottoland’s claims,
Google does not provide access to Google Ads to Lottoland’s competitors that
engage in similar activities relating to lottery betting. Google’s advertising policies
apply to all users of Google Ads, including Lottoland’s competitors. Google makes
every effort to remove ads that contravene its advertising policies once such ads
are brought to its attention, either through automated detection processes or
reporting mechanisms available to all users (including Lottoland).137
[119]On the evidence before us, Google has acknowledged in its supplementary
answering affidavit and conceded at the hearing, 138
that it still provides access to
Google Ads to some of Lottoland’s competitors due to an inconsistent enforcement
of its internal policies and the mechanisms that Google has put in place. Therefore,
the continuation of supply of Google Ads to Lottoland would prima facie not be
impractical or unfeasible for the reasons noted above. 139
Lottoland seeks nothing
more than equitable access with its rivals.
[120]Furthermore, Google has previously supplied Google Ads services to Lottoland
and there is no evidence to suggest that it was not economically feasible for it to
do so at the time.
[121]We conclude that it is prima facie economically feasible for Google to supply the
services in question to Lottoland.
136 Lottoland Heads of Argument, at para 55.3.
137 Google Ireland Answering Affidavit, at para 3.11.
138 Hearing Transcript, pp 111-112.
139 Google Ireland Supplementary Answering Affidavit, at paras 2.4 and 2.5.
3737
Pro-competitive gains
[122]Under section 8(1)(d), once the elements of section 8(1)(d) are satisfied the
competitive harm is presumed and the onus shifts to the respondent to
demonstrate that the effects are outweighed by pro-competitive gains. However,
as indicated above, under section 8(1)(c) an applicant or complainant must show
the elements of the exclusionary conduct as well as the effects. 40
[123]Lottoland contends that Google’s conduct has the direct result of distorting
competition in the market. Its refusal to allow Lottoland to use Google Ads while
allowing its rivals to do so also leads to a reduction of consumer choice: consumers
are less likely to be aware of Lottoland’s competing offerings, which includes a
wide variety of offers and choices of over 30 different draws to partake in, daily,
weekly, and monthly draws, all at competitive prices relative to its rivals.141 Google
argues that there is no evidence that consumers or end-users lack choice.
[124]Google further argues that Lottoland’s application rests on the meritless
proposition that it is entitled to make more money than it would otherwise.
However, in our view Lottoland’s contention that its expansion or growth has been
curtailed by Google’s action is relevant since we are required to consider the ability
of firms to grow and expand within a market.142
In this regard, we considered that
Lottoland has shown using its own data, as discussed above, that it has forgone
substantial revenues and the acquisition of customers as a result of Google’s
conduct. The question is then whether there is an adequate justification for
Google’s actions.
Google’s actions.
[125]As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal. As the authorities show, even dominant firms are entitled to refuse to deal.
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140 SAA, at paras 134 and 135.
141 Lottoland Heads of Argument, at para 43.6.
142 Section 1 of the Act.
143 eMedia CAC, at para 56.
3838
[126]Prima facie, Google exercises its market power in a manner which discriminates
between downstream customers who rely on equitable treatment to compete
effectively. Google’s rules were not applied uniformly in this case. This, in turn
prima facie causes harm to Lottoland’s ability to compete with its rivals for new
users and led to significant commercial harm from the loss of revenue evidenced
by Lottoland.144
[127]That there is slippage in Google’s application of its policies is not the fault of
Lottoland, particularly as the issue was raised with Google some months before.
What matters for our purpose is that the conduct complained of affects competition
downstream and prima facie affects the ability of Lottoland to grow and expand in
the market where it faces its rivals.
[128]Regarding Google’s justification, we received post-hearing submissions from the
parties on whether the provisions of section 57 of the Lotteries Act permit any
exception from criminal sanctions. Google relied on the fact that in 2021, Ithuba
successfully challenged the lawfulness of the business of Lottostar, a competitor
to Lottoland, which had been providing substantially similar lottery betting games
to the ones provided by Lottoland.145
[129]Google argued that it faces potential criminal liability and unacceptable commercial
risk in terms of the Lotteries Act if it were to approve ads promoting Lottoland’s
landing pages and further argued that alternative remedies are open to Lottoland
if it were to ultimately succeed in its complaint before the Commission following a
referral for determination to the Tribunal, such as a follow-on damages claim.
Google is of the view that it has no alternative currently to mitigate the risk of
contravening the law if the Tribunal were to grant interim relief and force Google to
permit Lottoland’s ads that promote lottery betting.
[130]In addition, Google is of the view that the WCGRB, which is the regulator which
[130]In addition, Google is of the view that the WCGRB, which is the regulator which
provided Lottoland with its current licence, is not legislatively competent to grant
144 Lottoland Heads of Argument, at paras 43.3 and 58.
145 The case was a full bench High Court appeal following the Supreme Court Appeal granting
Ithuba leave to appeal to the full bench; Ithuba Holdings (Pty) Ltd v Lottostar (Pty) Ltd and Others
(A46/2020) [2021] ZAMPMBHC 39 (30 August 2021) (“
Lottostar case / decision
”).
3939
licences pertaining to lotteries, including the placing of fixed-odds bets on the
outcome of lotteries. Gambling activities relating to lotteries are exclusively
regulated by the Lotteries Act. There is no concurrency of jurisdiction insofar as
lotteries are concerned and, accordingly, “any other law” does not include
provincial laws, including the WC Act
addressing other activities excluding lottery-
related activities. 146
It argues that this position is expressly enunciated in the
Constitution of the Republic of South Africa, 1996.
[131]Furthermore, Google also submitted that Lottoland is the subject of litigation before
the Western Cape High Court in a case brought by Ithuba due to the unlawfulness
of the business activities of Lottoland. However, the proceedings have been
pending since the close of pleadings in February 2020.
[132]On the other hand, Lottoland submitted that it does not claim that its bookmaking
activities are authorised under the Lotteries Act. However, in Lottoland’s view –
supported by the WCGRB – the fixed-odds betting that is offered on its website is
permitted by its bookmaker licence, granted under section 55 of the WC Act, and
thus, too, by the WCGRB.147
[133]Lottoland further provides that the appropriate authority to determine the
lawfulness of its conduct in the gambling sphere is the regulator which has issued
Lottoland with its bookmaker’s licence – i.e., the WCGRB. Specifically, the
regulator is required annually to consider whether to renew the licence, and also
approves all Lottoland’s advertising and advertisements.
[134]Lottoland submits that it does not engage in the conduct envisaged by section
57(1) of the Lotteries Act, as it does not “participate” in a lottery as envisaged by
section 57(1)(a); nor “conduct” a lottery, “facilitate” a lottery or “promote” a lottery
as contemplated in section 57(1)(b); or even “benefit” from the lottery as also
contemplated in section 57(1)(b).
contemplated in section 57(1)(b).
146 Google Supplementary Submissions relating to the Lotteries Act and the Applicant’s business
dated 28 July 2023, at para 6.3.
147 As pointed out in Lottoland’s Heads of Argument, Lottoland is the holder of a bookmaker’s
licence first issued to it by the WCGRB on 7 November 2017, and renewed by the WCGRB every
year since then. See e.g., Lottoland Founding Affidavit, at para 31; at paras 86 and 87, p27.
4040
[135]We note that the direct regulator of Lottoland’s business, one which reviews its
advertising content and services annually ostensibly with the expertise and
knowledge of the relevant provincial and national regulations to do so, continues
to issue Lottoland with a license to operate.
[136]On the evidence before us there are substantive disputes in relation to the legality
or not of Lottoland’s business as it relates to fixed-odds betting on the outcome of
lotteries. In our view, it is not appropriate for us to attempt to determine these
disputed issues.
[137]Furthermore, this is not a case in which we can find that there is a clear breach by
Lottoland of any law relating to lotteries.
[138]For the purposes of assessing an application for interim relief we consider that: (i)
Google has not presented clear evidence that Lottoland is in breach of the Lotteries
Act and the matter stands to be decided by other Courts; (ii) it is prudent in our
view, given the above, to err on the side of enabling a downstream firm to continue
to compete with its rivals; (iii) several other operators downstream have also
historically provided the same or similar services (for a number of years)
presumably under the understanding that their activities are legal (it would be a
serious legal and commercial risk to these businesses too to deliberately choose
to offer illegal services to customers); (iv) we are compelled that Google’s primary
justification (effectively claimed as a pro-competitive gain) has at the very least
been applied unevenly in the market; and (v) Lottoland is operating with a valid
bookmaker’s licence issued in terms of section 55 of the WC Act by the WCGRB.
[139]While there is no competition-related rationale for Google’s actions in this matter,
it is our view that Google’s conduct prima facie distorts competition in the
downstream market without any prima facie pro-competitive or efficiency
justification by Google.
4141
Conclusion on prohibited conduct
[140]Taking all the above evidence into consideration, we conclude that the termination
or restriction of access in this matter prima facie constitutes a refusal to deal in the
context of section 8(1)(d)(ii), given that the refusal prima facie undermines
Lottoland’s participation and expansion within the market in which it operates. The
conduct prima facie distorts competition by impeding the ability of a downstream
firm to expand within the market relative to its rivals in the absence of any
technological, efficiency or pro-competitive gain. Lottoland has provided evidence
on the impact on its business, which we interpret further below in circumstances
where; i) there is no clear evidence that there is a contravention of the Lotteries
Act; ii) there is evidence of unfairness or inconsistency in the application of
Google’s policies vis-à-vis Lottoland and its rivals; and iii) where access was
previously provided (from March 2020) and subsequently revoked (in September
2020).
Section 8(1)(c)
[141]As indicated above, section 8(1)(c) provides that it is prohibited for a dominant firm
to engage in an exclusionary act – if the anti-competitive effect of that act
outweighs its technological, efficiency or other pro-competitive gain.
[142]Our assessment above, while done in the context of section 8(1)(d)(i) is also
relevant for purposes of section 8(1)(c). For the reasons already set out in relation
to the section 8(1)(d)(i) case, we find that prima facie Google has also contravened
section 8(1)(c) of the Act in that its conduct has a prima facie anti-competitive effect
in that it distorts competition by impeding Lottoland’s ability to expand within the
market relative to its rivals which conduct is not outweighed by technological,
efficiency or other pro-competitive gain.
Irreparable harm to Lottoland
[143]Lottoland has quantified the effects on it of the alleged conduct. It argued that a s
[143]Lottoland has quantified the effects on it of the alleged conduct. It argued that a s
a direct result of Google’s refusal to allow it to utilise Google Ads its new customer
4242
registration dropped by between % and %. 148 Furthermore, based on the
seven months in which Google supplied its Google Ads to Lottoland, Lottoland
estimates that it has, as a result of Google'srefusal to supply, suffered a reduction
in revenue in the amount of which losses are ongoing.
[144]Lottoland submitted that in the period March 2020 to September 2020, it spent
(approximately % of its advertising budget) on Google Ads; the
remaining % was spent on other advertising channels. According to Lottoland,
Google Ads accounted for new registrations (that is new customers who
registered as players on www.lottoland.co.za), representing % of Lottoland's
new registrations over that period. 149 This shows that the share of Lottoland’s
budget spent on Google Ads as a single service provider and the results yielded
from that are significant.
[145]Google contests this evidence, claiming that it is speculative and refutable. It
argues that Lottoland’s extrapolation of “lost” revenue 150 in reality comprises
desired additional revenue from customers that Lottoland claims would be directed
to it if it made use of Google Ads.
[146]In addition, we requested submissions from Lottoland on its annual financial
statements for the period in which it submits that it suffered a reduction in revenue
in the amount of , in order to assess whether Lottoland’s purported
lost additional revenue is serious or irreparable harm for purposes of interim relief.
[147]Lottoland submitted that:
147.1. In calculating the loss suffered as a result of Google’s refusal to supply
access to its Ads Services, it extrapolated the percentage of new registrants
obtained via Google Ads during the seven months in 2020 when Lottoland
had access to those services, to determine the number of customers lost as
a result of Google’s refusal to supply, and applied its average lifetime value
148 Lottoland Founding Affidavit, at para 43.1; Lottoland Heads of Argument, at para 43.1.
149 Lottoland Founding Affidavit, at para 36.
149 Lottoland Founding Affidavit, at para 36.
150 Ibid, at para 19.
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of a customer (“LTV”) across the period since the date of Google’s refusal
to determine a quantifiable loss suffered as a result thereof.
147.2. Its calculation of the loss of profit estimated at is determined
as follows:
147.2.1. During the period in which Lottoland had access to Google Ads, %
of all new registrants came from pay-per-click (“PPC”) Google Ads. This
amounted to new PPC customers during the period 2 March
2020 to 11 September 2020.
147.2.2. When Lottoland’s access to Googles Ads was removed, the applicant
experienced an immediate drop in monthly registrations, from
registrations in August 2020 down to registrations in September
2020.
147.2.3. Extrapolating that same ratio to the period following Google’s
termination of Lottoland’s access to the date on which the present
application was issued, Lottoland calculated that potential new
customers were lost as a result of Google’s refusal.
147.2.4. Applying Lottoland’s LTV (which it quantifies at or per
customer, based on its experience and the data available to it) to
potential registrants, Lottoland quantifies its loss due to Google’s
refusal to supply Google Ads at .
[148]In assessing irreparable harm we take guidance from the CAC in eMedia where it
stated: “ n applying the three principles in s 49C(2) cognisance must be taken of
whether clear, non-speculative and uncontroversial facts have been presented by
an applicant from which it could be reasonably and logically inferred, on a balance
of probabilities, that the alleged irreparable harm would occur ... ”
151 and “There is
usually no time to delve too deeply in serious or irreparable harm but at the very
least it must be assessed in the context of whether there is a prima facie right at
the interim level. As long as there is clear and non-speculative evidence about
151 eMedia (CAC), at para 80.
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possible anti-competitive effects, then serious consideration must be given to the
grant of the relief
”152
[149]After considering all the evidence, we do not regard Google’s contentions as
adequate to refute the claims made by Lottoland for us to consider the prospects
for firms to participate and expand within markets.153 Part of how firms grow in the
market in which Lottoland competes is through the use of effective advertising
channels such as Google Ads. Indeed, several players in the downstream market
make use of Google Ads to reach customers. Furthermore, the evidence provided
by Lottoland of revenues lost appears to us to be based on sound projections using
available data and is not seriously contested in terms of how the estimates have
been derived or the significance of the quantum of (opportunity) losses incurred.
[150]We are of the view that Google’s conduct in this case prima facie resulted in
significant commercial harm to Lottoland as well as affecting its ability to compete
with its rivals for new users. Its access to new customers has evidently declined,
whereas a significant number of customers have been shown (using data from
March 2020 to September 2020) to be attracted by Lottoland’s services which are
brought to their attention or made accessible through search and Google Ads, even
in the presence of other marketing channels.
[151]The ongoing harm arising from Lottoland’s inability to use Ads Services to direct
consumers to its landing page (as its rivals do) to expand its new customer base
does not depend solely upon a consideration of the interests of the immediate
parties and should include consideration of the broader objectives of the Act. i.e.,
any potential (ultimate) effects on consumer choice. 154 The preamble to the Act
highlights the importance of access by consumers to goods and services: “provide
for markets in which consumers have access to, and can freely select, the quality
for markets in which consumers have access to, and can freely select, the quality
and variety of goods and services they desire , and the purpose of this Act is to
promote and maintain competition in the Republic in order to inter alia provide
152 eMedia (CAC), at para 93.
153 Lottoland Heads of Argument, at para 37.4, p 23.
154 National Association of Pharmaceutical Wholesalers and others v Glaxo Wellcome
(Proprietary) Limited and others , Case No. 68/IR/Jun00, p14. See also Business Connexion
(182/CAC/Mar20), at paras 17 and 31.
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consumers with competitive prices and product choice. Google’s conduct prima
facie affects (limits) consumer choice for end-consumers in that Lottoland
advertising through Google Ads is removed.
The balance of convenience
[152]In considering the balance of convenience in interim relief proceedings, the
Tribunal has to consider which of the two parties will suffer the greater harm from
the granting or refusal of the interim relief, pending a decision on the merits. If there
is clear and non-speculative evidence regarding the general extent of the harm
that one party would suffer if the relief requested is not granted, then the interim
relief ought to be granted.155
[153]We reiterate the guidance in eMedia, where the CAC emphasised that in interim
relief cases “ whilst there will inevitably be disputes of fact ”, these should not
prevent the Tribunal from taking a “robust approach” on the evidence before it, and
that “ if there is a prima facie right, even one open to some doubt and a well-
grounded apprehension of irreparable harm if the relief is not granted and
ultimately granted at final relief stage, then the balance of convenience favours the
grant of the relief”.
”.156
[154]We have concluded above that Lottoland has made out a prima facie case of
restrictive practices, as well of irreparable harm to it. Any prejudice which the
respondents may suffer during the period of our interim order, pending the
determination of the matter, must be considered against the prima facie effect on
competition in the market by Google impeding Lottoland’s ability to expand within
the market relative to its rivals, direct harm to Lottoland’s business and depriving
end-consumers of choice.
[155]Therefore, we conclude that the balance of convenience favours the granting of
the interim relief.
155 eMedia (CAC), at para 80.
156 eMedia (CAC), at paras 83 and 95.
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Conclusion
[156]For all the above reasons, we conclude that Lottoland has satisfied the
requirements of section 49C of the Act and made out a case for the interim relief.
[157]We make the following order: