The Intel-case was referred back to the General Court by the ECJ – The long running saga on rebates continues

On 6 September 2017, the European Court of Justice (“ECJ”) handed down a decision that sets aside the judgment of the EU’s General Court (“GC”) in which the GC upheld the EUR 1,06 billion fine imposed on Intel Corporation Inc. by the European Commission. Hence, the ECJ did not end this long running abuse of a dominant position case.

Following a formal complaint against Intel submitted in 2000 by Advanced Micro Devices Inc. (“AMD”), Intel’s competitor, the Commission launched a round of investigations in spring 2004 and consequently carried out inspections at several Intel premises in various EU Member States.

By a decision issued in May 2009, the Commission imposed a (then) record high EUR 1,06 billion fine on Intel for the abuse of its dominant position on the market of central processing units (“CPUs”, particularly x86 CPUs). The Commission found that Intel had infringed Art. 102 of the TFEU in two separate infringements by using:

  • Conditional rebates: Intel granted rebates for the main computer manufacturers on the condition that they purchased all, or almost all, of their x86 CPUs from Intel; and
  • “So-called naked restrictions” i.e. Intel made payments to certain customers conditional on their postponing, cancelling or restricting the marketing of certain products equipped with AMD CPUs.

The Commission determined that Intel had intended to exclude its competitor, thus AMD, from the market for x86 CPUs.

Intel brought an action for the annulment of the Commission’s decision before the GC. Alternatively, Intel was seeking at least a substantial reduction of the fine. The GC dismissed Intel’s action in its entirety in June 2014.

Next, Intel appealed against the GC’s judgment. According to Intel, the GC had erred in law by failing to examine the rebates at issue in light of the circumstances of the case presented by Intel and by failing to assess the likelihood of Intel’s conduct restricting competition. Thus, the GC simply accepted that the practices at issue could be considered an abuse of a dominant position within the meaning of Article 102 TFEU.

According to the ECJ, the Commission emphasised in its decision that the rebates at issue were by their very nature capable of restricting competition such that an analysis of all the circumstances of the case and the so-called as efficient competitor test (“AEC test”) were not necessary to find an abuse of a dominant position. However, the Commission carried out an in-depth examination of the circumstances and set out a very detailed analysis of the AEC-test. On this basis, the Commission concluded that Intel’s rebate scheme was capable of having foreclosure effects on as efficient competitors.

The GC determined in its judgment that neither considering whether the Commission had carried out the AEC test in accordance with the applicable rules and without making any errors, nor examining whether the alternative calculations proposed by Intel had been carried out correctly, was necessary. The GC attached no importance to the AEC test carried out by the Commission and, therefore, did not address Intel’s criticism of the test. The GC referred to previous case law and simply accepted that Intel’s exclusionary rebates may constitute abuse of a dominant position.

The ECJ did not accept this reasoning. The ECJ considered that the AEC test played an important role in the Commission’s assessment of whether Intel’s rebate scheme was capable of having foreclosure effects on as efficient competitors. Consequently, in those circumstances, the GC was required to examine all of Intel’s arguments concerning that test. The ECJ therefore set aside the GC’s judgment of 2014 and referred the case back to the GC, which it must now assess in light of the arguments put forward by Intel regarding whether Intel’s rebate scheme was capable of restricting competition.

This judgment is interesting not only because of the record high fines, but also because it signals that the Commission should move towards a more effects based analysis in its future investigations instead of form-based infringement findings. This is likely, at least to some extent, to shift the burden of proof from the companies under investigation to the Commission. Further, the Commission must consider the arguments and proof presented to it.

Further, the ECJ’s judgment may have an effect on other on-going dominance cases, such as the Qualcomm case, which also involves a rebate scheme, and even the Google case, in which the Commission imposed a record high fine earlier this year.