JUDGMENT OF THE GENERAL COURT OF THE EU IN THE INTEL CASE
In its judgment of 12 June 2014, the General Court of the European Union (“GC”) upheld the record EUR 1.06 billion fine that the European Commission imposed on Intel in 2009. According to the Commission, Intel abused its dominant position in the x86 CPUs market with the aim of foreclosing its competitors, and in particular, AMD, from this market.
The Commission deemed that the abuse was characterized by two types of measures adopted by Intel, namely (i) “exclusivity rebates”, which included both the granting of rebates to four computer manufacturers (Dell, HP, NEC and Lenovo) on the condition that they purchased all, or almost all, of their x86 CPUs from Intel, and the payments to Media Saturn Holding, which were conditional on it exclusively selling computers containing Intel’s x86 CPUs; and (ii) “naked restrictions”, which consisted of payments made to three computer manufacturers (HP, Acer and Lenovo) to postpone, cancel or restrict the commercial launch of products equipped with AMD CPUs.
As regards the first of these practices, the GC held that exclusivity rebates granted by an undertaking in a dominant position are, by their very nature, capable of restricting competition and foreclosing competitors from the market, given that they are designed to remove or restrict the purchaser’s opportunity to choose its source of supply and to deny other manufacturers access to the market.
Consequently, the GC pointed out that the Commission was not required to examine whether a competitor as efficient as Intel could afford to offer equivalent discounts without suffering losses. Therefore, regardless of the effects of the rebates granted, the GC stated that Intel’s conduct must be presumed illegal, even if a competitor as efficient as Intel could compete against the rebates in question, when the size of the rebates is marginal, or only a small part of the market is affected.
Regarding the naked restrictions, the GC held that Intel had pursued an anti-competitive object with these practices, since the only interest that an undertaking in a dominant position may have in preventing, in a targeted manner, the marketing of products equipped with a product of a specific competitor is to harm that competitor. Accordingly, the GC held that these practices fall outside the scope of competition on the merits of a product, and instead result in an abuse of a dominant position, since their objective was to make access to the market more difficult for AMD.
Finally, the GC found that the fine imposed on Intel was appropriate in light of the facts of the case. It pointed out that the Commission had calculated the fine at 5% of the total value of the sales to which the infringement relates, which is at the lower end of a scale that can go up to 30%. Moreover, the fine was equivalent to 4.15% of Intel’s annual turnover, so it did not exceed the 10% ceiling on fines.
The importance of this judgment is undeniable, since it is the first ruling on rebate schemes since the Commission’s 2009 Communication - Guidance on its enforcement priorities in applying Article 102 TFEU to abusive exclusionary conduct by dominant undertakings. In said communication the Commission had indicated the need to assess the legality of conducts which were allegedly abusive in light of a more economic approach, based on the effects that these practices caused in the market. By virtue of these principles, the Commission announced certain priorities in the prosecution of such abusive conducts. However, in this judgment, the GC moved away from this approach, giving back importance to the formalistic analysis, based on legal presumptions that the European Court of Justice typically used in the past.
Therefore, it remains to be seen how the 2009 guidance communication will be used in the future, and what conclusions the Commission will arrive at as regards its policy priorities in matters of abusive conduct. It cannot be ruled out that the Commission may even redirect the approach adopted in the guidance communication.