The Australian Competition and Consumer Commission (ACCC) has dropped its legal action against two Google subsidiaries over sponsored links.

However, the ACCC said that it only took the decision after Google said that any judgement made against it would automatically apply to its subsidiary companies.

A hearing to discuss the development of the case against Google and Trading Post officially discontinued the actions against Google Ireland and Google Australia.

"The basis for this discontinuance was due to submissions made by Google Inc, the ultimate parent company of Google, that it is responsible for all representations made on google.com.au," a statement from the ACCC said.

"After confirming this position, the ACCC agreed that it was appropriate that proceedings against Google Ireland and Google Australia only be discontinued as any outcome against Google Inc would necessarily be put into effect in Australia."

The ACCC filed a two-page summary outlining the case against Trading Post and Google.

Justice Allsop, who is presiding over the case, also dismissed Google's motion that the ACCC's claims be struck-out, which the company made at the last hearing.

The ACCC said it would now file and serve amended pleadings by 25 October and the next further directions hearing would be held on 16 November.

The case claims that Google does not distinguish clearly enough between sponsored advertising links and search results.

Trading Post Australia is accused of using links showing competitors' names to direct users looking for those companies to its own website.

The charges date back to 2005 and Trading Post is accused under Australia's Trade Practices Act of 1974.