European justice annuls the fine of 1,060 million that Brussels imposed on Intel

The General Court of the European Union (TGUE) annulled this Wednesday a fine of 1,060 million euros that the European Commission imposed on the American manufacturer Intel for having abused its dominant position in the world market for microprocessors. The sanction, set in 2009, was the largest ever imposed by the Community Executive. European justice, however, considers that “the analysis carried out by the Commission is incomplete” and “does not allow to demonstrate” sufficiently that the practices that Brussels declared illegal “could or could produce effects contrary to competition.” It is not the first time that the Commission has received a blow from European judges for not having been able to justify its decisions on competition matters. Last July, Luxembourg agreed with Apple for the same reason and reversed the return of 13,000 million euros to Ireland that Brussels had considered State aid.

The case refers to an investigation that concluded with a sanction against Intel because, between 2002 and 2007, it implemented practices that prevented free competition from other companies. With a 70% market share, Intel offered discounts to four major computer manufacturers (Dell, Lenovo, HP, and NEC) in exchange for gaining virtual exclusivity on the sale of their x86 processors. It also paid the firm Media-Saturn, owner of MediaMarkt, to only market computers equipped with those processors. In addition, it made payments to three manufacturers (HP, Acer, and Lenovo) to stop or delay the launch of products that incorporated chips from Intel’s only major rival, AMD. According to the TGUE, “these discounts and payments presumably guaranteed the loyalty of the four equipment manufacturers and Media-Saturn and, in this way, significantly reduced the ability of competitors to exercise competition based on the merits of their own processors. x86″. For this reason, the Commission considered that this conduct was contrary to free competition and contributed to “reducing the offer for consumers and the incentives for innovation.”

The TGUE itself dismissed a first appeal by the US firm in 2014, but the company then filed an appeal before the EU Court of Justice (CJEU), which upheld it in 2017, annulling the 2014 ruling, which meant return the matter to the General Court. In its ruling this Wednesday, the court admits the arguments that prove the existence of these discounts. However, it considers that although this practice could restrict competition, it is a “presumption” that does not exempt the Commission from “examining the disputed discounts taking into account all the circumstances of the case.”

In this sense, the General Court examines the “errors” that the Commission could have made when analyzing each of the “discounts in dispute” (those made to manufacturers and payments to the distributor) and from there determine their ability to cause the ” expulsion from the market” of competitors. The TGUE considers that the Commission did not sufficiently demonstrate that the discounts applied to the manufacturers caused the expulsion of the competition or that it exceeded when extrapolating that supposed effect detected in one quarter to the rest of the analyzed period. Likewise, regarding the payments to Media-Saturn, the Court considers that the Commission extrapolated the results of the payments obtained in one quarter to the entire infringement period, without justifying it “at all”.

The TGUE partially upholds Intel’s appeal by concluding that the Commission’s analysis is “incomplete” as it does not allow sufficient demonstration of “the capacity of each of the controversial discounts to produce an effect of expulsion from the market”.

For this reason, the European justice decides to annul “in its entirety” the fine of 1,060 million euros, although it clarifies that it decides to cancel it completely because “it cannot identify the amount of the fine corresponding only to the manifest restrictions”, that is, it does not it can calculate a fine for infringements of competition that it does appreciate. Against this ruling there is an appeal before the Court of Justice, limited to questions of law, within a period of two months and ten days from this Wednesday.

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