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Intel’s appeal against of €1.06 billion fine should be upheld

Staff Writer |
By decision of 13 May 2009, 1 the Commission imposed a fine of €1.06 billion on Intel for having abused its dominant position on the market for x862 central processing units (CPUs), in infringement of the competition rules of the EU and the European Economic Area (EEA).

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Moreover, the Commission ordered Intel immediately to bring an end to that infringement in so far as it had not done so already.

According to the Commission, Intel abused its dominant position on the worldwide market for x86 CPUs from October 2002 to December 2007, by implementing a strategy aimed at foreclosing a competitor, Advanced Micro Devices, from the market.

The Commission considered that Intel was in a dominant position on the ground that it held a market share of roughly 70% or more, and that it was extremely difficult for competitors to enter the market and to expand as a result of the unrecoverable nature of investments to be made in research and development, intellectual property and production facilities.

According to the Commission, the abuse was characterised by several measures adopted by Intel vis-à-vis its own customers (computer manufacturers) and the European retailer of microelectronic devices, Media-Saturn-Holding.

Accordingly, Intel granted rebates to four major computer manufacturers (Dell, Lenovo, HP and NEC) on the condition that they purchased from Intel all, or almost all, of their x86 CPUs. Similarly, Intel awarded payments to Media-Saturn, which were conditioned on the latter selling exclusively computers containing Intel’s x86 CPUs.

According to the Commission, those rebates and payments induced the loyalty of the four manufacturers listed above and of Media-Saturn, and thus significantly diminished the ability of Intel’s competitors to compete on the merits of their x86 CPUs.

Intel’s anti-competitive conduct thereby resulted in a reduction of consumer choice and in lower incentives to innovate. On the basis of the 2006 Guidelines, the Commission imposed a fine on Intel of €1.06 billion.

Intel brought an action against the Commission’s decision before the General Court, seeking the annulment of that decision or, at least, a substantial reduction of the fine.

On 12 June 2014, the General Court dismissed Intel’s action in its entirety.

The Advocate General therefore concludes that the General Court erred in finding that ‘exclusivity rebates’ constitute a separate and unique category of rebates that require no consideration of all the circumstances in order to establish an abuse of dominant position.

In addition, the Advocate General goes on to determine that the General Court erred in law in its alternative assessment of capability by failing to establish, on the basis of all the circumstances, that the rebates and payments offered by the appellant had, in all likelihood, an anti-competitive foreclosure effect.

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