The European General Court confirms the sanction against Intel for the abuse of their dominant position
By judgment of 12 June 2014 in Case T-286/2009, the General Court of the European Union (“EGC”) dismissed Intel’s appeal against the decision of 13 May 2009, by which the European Commission (“EC”) had imposed a fine of EUR 1.06 billion on Intel for anticompetitive practices. Specifically, the penalty was linked to Intel’s conduct between 2002 and 2007, considered capable of infringing Article 82 of the EC treaty and Article 54 of the Agreement on the European Economic Area, allegedly at the expense of its rival, AMD.
By the judgment under review, the EGC entirely embraced the arguments of the EC stating that Intel had abused its dominant position on the processors’ market (of which its market share was 70%) in order to prevent – or at least make more difficult – the competition by AMD, its only serious market competitor. In particular, Intel had stipulated agreements with four major computer manufacturers (HP, Dell, Lenovo and NEC) granting them rebates on the condition that they restrict or exclude purchases of AMD’s x86 processors. Furthermore, Intel had made payments to HP, Acer, Lenovo and one of the leading European electronics distributors (Media-Saturn Holding) in exchange for the postponement of commercialisation, on their part, of products equipped with AMD’s x86 processors.
These agreements between Intel and its partners were considered “exclusivity rebates” and “naked restrictions” by the EGC, both anticompetitive practices, which is to say:
a) “exclusivity rebates”: rebates conditioned on the exclusivity (or near exclusivity) of the demand by the customer, who is “rewarded” for their “loyalty” to the manufacturer, i.e. for not purchasing products from competing manufacturers. According to the EGC, such rebates are always capable of distorting the competition within the common market when performed by a company in a dominant position (like Intel), since they are not linked to a direct economic benefit but are designed to remove or restrict customers’ freedom to choose and, therefore, to deny competitors access to the market (or make it more difficult). For these reasons, contrary to Intel’s defenses, according to the EGC it is not necessary to demonstrate (in particular, by means of the so-called “as efficient competitor test”) that such conditions are capable of restricting the competition in a concrete case.
b) “naked restrictions”: contractual terms on the basis of which payments are conditioned upon the fact that the partner delays, restricts or cancels the distribution of some products as opposed to others. According to the EGC, such practices are capable of restricting competition within the common market because their only goal is to deny competitors access to the market (or make it more difficult). Thus, an analysis of their actual capacity to restrict the competition in a concrete case is not necessary.
In conclusion, the EGC therefore confirmed the fine imposed by the EC, and also rejected Intel’s request to reduce the fine. Nevertheless, Intel may further appeal the decision to the Court of Justice of the European Union.