Antitrust Law Daily Wrap Up, ANTITRUST—EU Gen. Ct: European General Court affirms EC decision, €1.06 billion fine against Intel, (Jun 12, 2014)

By Linda O’Brien, J.D., LL.M.

The European Commission’s finding that Intel Corp. engaged in anticompetitive conduct by abusing its dominant market position to foreclose a competitor and imposition of a €1.06 billion fine was upheld by the European General Court (Intel Corporation v. European Commission, June 12, 2014).

Intel Corporation designs, develops, manufactures, and markets central processing units (CPUs) and other semiconductor components for data processing and communication devices. Following a complaint by Advanced Micro Devices (AMD), the European Commission (EC) began an investigation into claims that Intel Corporation had engaged in exclusionary marketing arrangements with the largest desktop computer distributor in Europe. In May 2009, the EC adopted a decision that Intel committed a single and continuous infringement of European Union (EU) antitrust regulations by implementing a strategy aimed at foreclosing competitor Advanced Micro Devices (AMD) from the market for CPU microprocessors. Intel appealed to the General Court, claiming the EC decision should be annulled.

The General Court determined that the Commission correctly demonstrated the existence of Intel’s conditional rebates and naked restrictions. The EC concluded that Intel engaged in two types of abuse of its dominant position in CPU market: (1) it granted rebates to four personal computer and server manufacturers that were conditioned on them obtaining all of their supplies from Intel and conditioned payments to a computer retailer to only sell personal computers with Intel CPUs and (2) it granted direct payments to three computer manufacturer to halt, delay, or limit the launch of specific products incorporating CPUs from AMD, Intel’s only competitor (“naked restrictions”).

The Court also found that the EC correctly demonstrated that Intel attempted to conceal the anticompetitive nature of its practices and that the practices at issue were an abuse of Intel’s dominant market position. In its decision, the EC noted that the conditional rebates and payments were generally not written into any contracts and that Intel had tried to conceal them. The EC also determined that Intel’s conduct had undermined competition and innovation.

Finally, the fine of €1.06 billion imposed by the EC on Intel was also appropriate in light of the gravity and duration of the infringement, according to the Court. Under the EC 2006 Guidelines, the EC did not have to take into account any actual impact on the market when determining the gravity of the infringement.

The EC announced that it welcomed the judgment of the Court as significant, since the decision confirmed that the EC was justified in pursuing the anticompetitive conduct in question in a major worldwide market. The EC stated that it will continue to pursue abuses of dominant market positions, which restrict competition in the Single Market to the detriment of customers.

The case is No. T-286/09.

Companies: Intel Corporation; Advanced Micro Devices

Cases: Antitrust