The Australian Competition and Consumer Commission (ACCC) has announced it has instituted
legal proceedings in the Federal Court, Sydney, against Trading Post
Australia Pty Ltd, Google Inc, Google Ireland Limited and Google
Australia Pty Ltd alleging misleading and deceptive conduct in relation
to sponsored links that appeared on the Google website.

The ACCC is alleging that Trading Post contravened sections 52 and 53(d) of the Trade Practices Act 1974
in 2005 when the business names "Kloster Ford" and "Charlestown Toyota"
appeared in the title of Google sponsored links to Trading Post’s
website. Kloster Ford and Charlestown Toyota are Newcastle car
dealerships who compete against Trading Post in automotive sales.

In other words, the ACCC says that Trading Post bought those names for use to link to its site when certain automotive sales searches were performed on Google even though Trading Post had no association with those names.

The ACCC is also alleging that Google, by causing the Kloster Ford
and Charlestown Toyota links to be published on its website, engaged in
misleading and deceptive conduct in breach of section 52 of the Act.

Further, the ACCC is alleging that Google, by failing to adequately
distinguish sponsored links from "organic" search results, has engaged
and continues to engage in misleading and deceptive conduct in breach
of section 52 of the Act.

The ACCC is seeking:

• declarations that Trading Post contravened sections 52 and 53(d) of the Act
• declarations that Google contravened section 52 of the Act
• injunctions restraining Trading Post from representing through
  sponsored links an association, sponsorship or affiliation with another
  business where one does not exist
• injunctions restraining Google from publishing sponsored links of
  advertisers representing an association, sponsorship or affiliation
  where one does not exist
• injunctions restraining Google from publishing search results that
  do not expressly distinguish advertisements from organic search results
• orders that Trading Post and Google implement trade practices compliance programs
• an order that Google publish a notice on its website outlining the above, and
• costs.

The matter has been listed for a directions hearing in the Federal Court, Sydney, on 21 August 2007.

UPDATE: Google rejects claims (ZDNet). Previous story about Trading Post and Stickybeek.