At sexta-feira Negra last year, the Magazine Luiza went to Justice to demand that the Via stop using your brand as a keyword for displaying ads: a practice used to divert traffic from competitors on the internet. The lawsuit was distributed to the 2nd Business Court and Arbitration Conflicts and the company obtained a favorable decision, in which the judge asked for the disabling of Via’s sponsored advertisements within a maximum period of two hours after receiving the preliminary decision. But it did not stop there. Shortly afterwards, in December, Via filed a similar lawsuit against Magalu and also received a favorable response from the judge.
The information was previously disclosed by Valor Econômico newspaper and obtained by Estadão/Broadcast among the public parts of the process. In the lawsuit filed by Magazine Luiza, Via is accused of hiring “sponsored ad services with Google search sites so that its site would appear as a prominent result if the user used the brands ‘Magazine Luiza’ and ‘Magalu’ as terms of search”.
Judge Eduardo Palma Pellegrinelli’s decision considered Magazine Luiza’s request that this practice be ended quickly, as it took place during a heated sales period: Black Friday.
In Via’s lawsuit, Magazine Luiza is accused of using “search tools and sponsored link mechanisms to attract common customers, by linking the brands Casas Bahia and Ponto Frio as search criteria”. In that case, Judge Luis Felipe Ferrari Bedendi granted urgent relief to order Magalu to stop “using the ‘Casas Bahia’ and ‘Ponto Frio’ brands [ou qualquer outra expressão que com elas se assemelhe] such as titles and keywords for making sponsored advertisements available on search engines such as Google, Bing and any similar ones, as well as including such reproductions and imitations in the title of your sponsored advertisements, all within five days”. Via’s action was distributed to the 1st Business Court and Arbitration Conflicts.
J Amaral Advogados partner Fabio Pimentel says that sponsored ads have become a strategic tool for internet sales and that the pandemic has accelerated online commerce. “Naturally, with this acceleration, competition challenges also arise. After all, competition develops in both the physical and digital spheres. .
He also points out that the preservation of free competition, which is at stake in issues like this, should be increasingly important for the country. “In this sense, it is worth remembering that the resumption of discussions for Brazil’s entry into the OECD will certainly demand an increasingly effective performance with regard to the preservation of free competition, especially in times of an increasingly digital and globalized economy”, says Pimentel.
For Gustavo Chapchap, leader of the E-Commerce Committee of the Brazilian Association of Digital Agents and director of Jet/ZapCommerce, the practice of which Via and Magazine Luiza were accused is not new. “Unfair competition buying the competitor’s words is something that has been happening for a long time and in several markets”, he says. He even says that search platforms already have mechanisms that somehow penalize this way of trying to divert traffic from the competition. “The robot (from a certain platform) identifies that the link’s destination has nothing of the key term it is advertised for and charges a higher price (for the ad click),” he explains.
Sought after, Via and Magazine Luiza said they did not comment on ongoing processes.