The Intel-saga: A victory for Intel at last

A quick recap on the saga, on 13 May 2009 the Commission imposed a fine on Intel for infringing Article 102 of the Treaty on the Functioning of the European Union (“TFEU”) by abusing its dominant position on the worldwide market for microprocessors (x86). According to the Commission, Intel engaged in two types of abusive conduct: 1) naked restrictions[1] and 2) conditional rebates and payments that resulted in a strategy intended to exclude competitors from the market. The Commission considered its decision to be in line with the approach laid down in its 2009 Guidance Paper (as it carried out an ‘as-efficient competitor’ (AEC)-analysis), but also stated that the conduct at hand was prohibited by its nature based on case law (such as Hoffmann-La Roche, British Airways, Compagnie Maritime Belge and Michelin II). Intel appealed to the GCEU against the sanction decision, but only in relation to the allegations about conditional rebates. In its judgement on 12 June 2014, the GCEU dismissed Intel’s appeal in its entirety.[2] However, on 6 September 2017 the Court of Justice of the European Union (“CJEU”) set aside the GCEU’s 2014 judgement. The CJEU referred the case back to the GCEU because it found that the GCEU failed to examine all of Intel’s counterarguments in relation to the AEC-test in order to establish whether the rebates were (actually or likely) capable of restricting competition. The 2017 judgement remains a landmark decision for assessing loyalty rebates under EU competition law and, more generally, contains the principles of assessing potentially exclusionary conduct under Article 102 TFEU.

On 26 January 2022, the GCEU came with a lengthy judgement implementing the legal assessment as decided by the CJEU. In short, the GCEU partly annuls the contested 2009 decision on the basis that the analysis carried out by the Commission is incomplete and does not meet the requisite legal standard that the rebates were capable of having, or were likely to have, anticompetitive effects. Furthermore, we wish to highlight the following interesting considerations from the judgement:

• In assessing the foreclosure capacity of a scheme of rebates (where a dominant undertaking submits on the basis of supporting evidence that the conduct is not capable of restricting competition), the Commission – as a minimum – must apply the five criteria mentioned in the 2017 judgement (para. 139):

1. the extent of the undertaking’s dominant position on the relevant market;
2. the share of the market covered by the challenged practice;
3. the conditions and arrangements for granting the rebates in question;
4. their duration and their amount;
5. the possible existence of a strategy aiming to exclude competitors that are at least as efficient as the dominant undertaking from the market.

The GCEU concluded that the analysis of the Commission in relation to these criteria was incomplete (specifically concerning the criteria under 2) and 4)) and therefore insufficient.

• In case an AEC-test is carried out by the Commission, that test is one of the factors that must be taken into account in the assessment whether the rebate scheme is capable of restricting competition.
• The GCEU considered that the Commission erred in law by taking as a starting point the premiss that, in essence, the Hoffmann-La Roche case-law allowed it simply to find that the rebates at issue infringed Article 102 TFEU on the ground that they were by their very nature abusive, without necessarily having to take account of the capability of those rebates to restrict competition in order to reach the conclusion that they constituted an abuse.
• In relation to the standard of proof the GCEU considered that:

1. The alleged infringement has not been sufficiently demonstrated in case the Commission maintains that the established facts can only be explained by anticompetitive behaviour whilst the undertaking concerned brings forward a different plausible explanation of the facts;
2. The undertaking concerned must demonstrate that the probative value of the evidence that the Commission relies on, and which can demonstrate the existence of an infringement, is insufficient;
3. Pursuant to the presumption of innocence, when there is any doubt the benefit should go to the defendant.

The GCEU further carried out an in-depth assessment of the AEC-test carried out by the Commission (in relation to Dell, HP, NEC, Lenovo and MSH). The GCEU, inter alia, found that the evidence brought forward by Intel raised doubts in relation to the correctness of the analysis of the Commission and that there were errors in the AEC-test.

The GCEU concluded that the Commission was not in a position to determine that Intel’s rebates and payments at issue constituted an infringement of Article 102 TEFU. This results in the annulment of this part of the decision (Article 1(a) and (e)). In relation to the amount of the fine and whether the fine could also be partly annulled, it is of relevance that the GCEU asked the Commission back in 2012 to indicate what the relative value of the infringements (rebates and payments vs. naked restrictions) was. The Commission stated that it had assessed the conduct as a whole and that the infringements completed and mutually reinforced one another. A statement that costs the Commission dearly, as the GCEU considered that it could thus not identify the amount of the fine which related solely to naked restrictions. Consequently, the fine should be annulled in its entirety.

The 2022 judgement paves the way (and underlines the importance) of full-fletched effects-based assessments of anti-competitive foreclosure effects, instead of presumptions of competitive harm. Especially when evidence is put forward by the undertaking concerned that there is no anti-competitive foreclosure resulting from the conduct (in this case exclusivity rebates).

Even though this is a win for Intel as the fine of € 1,06 billion is off the table for now (and must be paid back by the Commission incl. interest), the Intel-saga may not be over yet as an appeal can be lodged at the CJEU against the 2022 judgement. However, this appeal must be limited to points of law.

For more information, please contact Pauline Kuipers and Tialda Beetstra.

[1] ‘Naked restrictions’ refers to payments made by Intel to certain customers in order for them to delay, cancel or in some other way restrict the commercialisation of specific AMD (Intel’s closest competitor)-based products.

[2] As Intel did not appeal against the decision relating the ‘naked restrictions’, this allegation was not addressed in the 2014 judgement and therefore also outside the scope of the 2022 judgement.