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EU justice cancels record fine against Intel

The European Commission’s analysis is incomplete and does not make it possible to establish to the requisite legal standard that the rebates at issue were capable of having, or likely to have, anticompetitive effects, explains the General Court of the European Union. Its decision can still be appealed to the Court of Justice of the European Union.

By decision of 13 May 2009, the European Commission imposed on the microprocessor manufacturer Intel a fine of €1.06 billion for having abused its dominant position on the worldwide market for x86 processors between October 2002 and December 2007, by implementing a strategy intended to exclude competitors from the market. This fine is the fourth highest amount imposed for anti-competitive practices by the Commission.

According to the Commission, that abuse was characterised by two types of commercial conduct engaged in by Intel vis-a-vis its trading partners, namely naked restrictions and conditional rebates, explains the General Court of the European Union. As regards conditional rebates more specifically, Intel was found to have granted to four strategic original equipment manufacturers (‘OEMs’) (Dell, Lenovo, Hewlett-Packard (HP) and NEC), rebates which were conditional on those OEMs purchasing all or almost all of their x86 central processing units (CPUs) from Intel. Similarly, Intel was found to have awarded payments to a European retailer of microelectronic devices (Media-Saturn-Holding; ‘MSH’) which were conditional on MSH selling exclusively computers containing Intel’s x86 CPUs. Those rebates and payments (‘the rebates at issue’) ensured the loyalty of the four OEMs and MSH and thereby significantly diminished the ability of competitors to compete on the merits of their own x86 processors. According to the Commission, Intel’s anticompetitive conduct thereby resulted in a reduction of consumer choice and in lower incentives to innovate.

The action brought by Intel against that decision was dismissed in its entirety by the General Court by judgment of 12 June 2014. By judgment of 6 September 2017, on the appeal brought by Intel, the Court of Justice set aside that judgment and referred the case back to the General Court.

In support of its claim for annulment of the initial judgment, Intel criticised the General Court in particular for having erred in law on account of the failure to examine the rebates at issue in the light of all the relevant circumstances. In that regard, the Court of Justice noted that the General Court, like the Commission, had relied on the assumption that the fidelity rebates granted by an undertaking in a dominant position were by their very nature capable of restricting competition, with the result that it was not necessary to analyse all the circumstances of the case or to carry out an as-efficient-competitor (‘AEC’) test. Nevertheless, the Commission did carry out, in its decision, an in-depth examination of those circumstances, which led it to conclude that an as-efficient competitor would have had to offer prices which would not have been viable and that, accordingly, the rebate scheme at issue was capable of having foreclosure effects on such a competitor. The Court of Justice concluded that the AEC test had played an important role in the Commission’s assessment of whether the scheme at issue was capable of having foreclosure effects on competitors, with the result that the General Court was required to examine all of Intel’s arguments concerning that test and how the Commission had applied it. Since the General Court had failed to conduct such an examination, the Court of Justice set aside the initial judgment and referred the case back to the General Court in order for it to examine, in the light of the arguments put forward by Intel, the capability of the rebates at issue to restrict competition.

By its judgment of 26 January 2022, the General Court, giving a ruling on the referral back, sets aside in part the contested decision in so far as it characterises the rebates at issue as abusive within the meaning of Article 102 TFEU and imposes a fine on Intel in respect of all of its actions characterised as abusive.

As regards the effect of such setting aside in part of the contested decision on the amount of the fine imposed by the Commission on Intel, the General Court consider that it is not in a position to identify the amount of the fine which relates solely to the naked restrictions. Accordingly, it annuls in its entirety the article of the contested decision which imposes on Intel a fine of €1.06 billion in respect of the infringement found.

Source: General Court of the European Union