THE consumer watchdog's claims that Google engaged in misleading and deceptive conduct by not adequately distinguishing between advertisements and regular search results has been dismissed by the Federal Court.

In a judgment handed down yesterday Justice John Nicholas also dismissed the Australian Competition and Consumer Commission's claim that Google was liable for advertisers using competitors' names and trademarks in ''sponsored links''.

Previously, the Trading Post had admitted to using competitor car dealers' names in the headlines of its advertising on Google. This meant that those searching for the car dealers were instead directed to the Trading Post's site when they clicked the ad.

In 2008 the ACCC and the publisher of the Trading Post, Sensis, agreed that by including the names "Kloster Ford" and "Charlestown Toyota" it had engaged in conduct likely to lead users to believe that by clicking on the advertisements, they would be taken to a website associated with the car dealers or which contained information about them.