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Com Com to head to court on Google Ads price fixing

By Shannon Williams, 16 Aug 2021

The Commerce Commission has filed proceedings at the High Court in Christchurch seeking declarations that consumer loan provider Moola engaged in cartel conduct relating to online advertising on Google Ads.

The Commission alleges Moola reached agreements with other consumer loan providers that they would not bid on each other’s brand names on Google Ads. The Commission also alleges agreements were reached that the companies would negatively match certain keywords. 

This means that consumers searching for a consumer loan provider on Google may not see ads for other loan providers.

According to the Commerce Commission, it considers these agreements fixed, controlled or maintained the price paid by Moola for its online advertising on Google Ads and prevented, restricted or limited the purchase of online advertising on Google Ads. 

As a result, the Commission alleges, entering into and giving effect to the agreements breached the Commerce Act.

The Commission is not seeking a pecuniary penalty in this proceeding, it says.

Earlier this year, new laws came into effect that made being part of a commercial cartel a criminal offence.

The law was changed last year turning it from a civil to a criminal matter, meaning individuals who are convicted could face a seven-year jail sentence or a fine of up to $500,000.

The law opens the door for whistleblowers to get immunity - if the Solicitor General agrees - or leniency from the Commerce Commission.

The sort of behaviour that will attract court attention is price fixing or market manipulation. Last year, a Nelson pharmacy and one of its directors was hit with a fine for nearly $400,000 for price-fixing.

However, Moola's alleged breach pre-dates the changes that were made to the law.

Moola is a consumer finance company providing high-cost short term loans up to $5000. It operates through its websites moola.co.nz and needcashtoday.co.nz.

Search results on Google include both organic search results and paid advertising results through Google Ads. 

Google Ads is an online advertising platform offered through the Google search platform. Companies can pay to display their products and services as an advertisement in response to a search for a particular word or phrase. The display ranking of an advertisement and the amount paid by the advertiser to Google Ads is determined by a live second-price auction or spot market.

Negatively matching keywords prevents certain ads from being triggered by a certain word of phrase, meaning certain ads will not display to anyone who is searching for that word of phrase.

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