EU Court Backs Intel's Appeal of 2009 Fine, in Blow to Regulator -- 2nd Update
September 06 2017 - 10:24AM
Dow Jones News
By Natalia Drozdiak
BRUSSELS--The European Union's highest court on Wednesday backed
Intel Corp.'s appeal of a EUR1.06 billion ($1.26 billion) EU
antitrust fine in 2009, referring the case back to a lower court
and dealing a blow to an antitrust regulator that has taken a hard
line on U.S. tech giants.
The decision could embolden companies challenging the European
Commission, the bloc's antitrust authority, in court over
competition decisions--cases the regulator typically wins. It could
also force the commission to re-examine its strategy in several
ongoing cases.
The Intel case centers on whether a dominant company--in any
industry--abuses its commercial power by offering rebates to
business customers to retain their market position. The commission
in 2009 argued that the chip maker violated the bloc's antitrust
rules because dominant companies' use of rebates are by nature
restrictive of competition.
The European Court of Justice said in a statement that the lower
court failed to examine whether Intel's rebates to other companies
restricted competition.
The decision signals that dominant companies' use of rebates
aren't de facto problematic, meaning that regulators may now have
to prove in each case that the rebate measures offered cause
economic harm. That could make it harder for the commission when it
seeks to lodge another such antitrust case.
"This is certainly a defeat for the European Commission and
indicates a certain relaxation of the formalistic case law on abuse
of dominance," said Assimakis Komninos, a Brussels-based partner at
law firm White & Case. "While the Intel case is about rebates,
all major corporates being investigated by the commission can take
this as a positive sign."
The ruling could have ramifications for other abuse-of-dominance
cases, including the regulator's antitrust probe into Qualcomm
Inc., which it accuses of illegally paying Apple Inc. to
exclusively use its chips and selling chips below cost to force a
competitor, Icera Inc., out of the market.
Most recently, the EU levied a record EUR2.42 billion fine
against Alphabet Inc.'s Google in June for abusing its market
position with its shopping service. Google has said it is
considering an appeal.
In future appeals to antitrust decisions, the EU regulator won't
be able "to defend its decision on the basis of narrow legal
grounds as the general court will have to look at the economic
arguments" put forth by the company, said Damien Geradin, a partner
at competition law firm Euclid Law.
The ECJ ruling could also give dominant companies more freedom
over how they offer rebates and discounts. As a result, it may also
unintentionally make rules for compliance murkier.
"The commission takes note of today's ruling by the European
Court of Justice and will study the judgment carefully," the
commission said. "It is now for the general court to review the
commission decision under the framework set out by today's
judgment."
Intel welcomed the ruling. "While this case concerns events that
happened more than a decade ago, we have always believed that our
actions were lawful and did not harm competition," said Steven
Rodgers, the company's general counsel.
In the Intel case, the commission penalized the company over
rebates it granted to four major computer manufacturers--Dell Inc.,
Hewlett-Packard Co., NEC Corp. of Japan and Lenovo Group--for using
its microchips between 2002 and 2007.
The antitrust authority found that Intel had used the rebates,
coupled with its dominant position, to lock rival Advanced Micro
Devices Inc. out of the market, reducing choice for consumers. The
EU also said Intel made payments to electronics retailer Media
Saturn Holding on the condition that it only sold computers
containing Intel's microprocessors.
While the commission argued the company's rebates were by their
nature anticompetitive, it also carried out an in-depth analysis of
the circumstances, proving the rebate scheme was capable of
shutting out a rival.
Intel appealed the decision to the EU's general court. The court
in 2014 backed the commission's first argument that dominant
companies' rebates are by nature potentially anticompetitive--a
decision Intel then appealed to the ECJ.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
September 06, 2017 10:09 ET (14:09 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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