Advertising pact may breach anti-trust rules

The European Commission confirmed Monday that it has launched a preliminary investigation into a proposed online advertising pact between Google and Yahoo.

A formal probe will follow if the regulator decides the North American deal infringes on EU rules on restrictive business practices.

The commission began looking at the deal in mid-July. There is no deadline for a decision.

The U.S. Justice Dept. is also scrutinizing the deal.

The nonexclusive agreement, announced in June and due to start in October, involves Google supplying ads to Yahoo’s U.S. and Canadian websites. The companies will share the revenue.

Google said the deal will not have any significant effect on Europe, but the World Assn. of Newspapers disagreed and has told the commission that many of its European members active in North America will be directly harmed by any anti-competitive conduct there.

The org also maintains that the deal will reduce incentives for Yahoo to compete against Google in Europe. “Because Google and Yahoo together control over 95% of advertisers’ search advertising spending in Europe, the two companies could easily set the conditions for competition in the EU if they chose to do so,” the association warned.

The Newspaper Assn. of America, a WAN member, distanced itself from this position, saying it had yet to take a view on the Google-Yahoo partnership.

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