General Court confirms record fine against Intel

The General Court, by judgment of 12.06.2014, T-286/09, has confirmed the fine of EUR 1.06 billion imposed by the European Commission on Intel. 

The Commission found that Intel`s market share, between 1997 and 2007, was around 70% and that it used this dominant position to grant exclusivity rebates and premiums. Between 2002 and 2007, Intel firstly granted manufacturers a rebate, provided they exclusively or almost exclusively purchased from Intel. In addition, Intel paid chain stores for selling only computers with Intel processors and paid manufacturers for delaying, limiting or refraining from sales of computers with processors from Intel’s competitor AMD.

Both the rebates and the payments contributed, in the view of the Commission and the Court, to restricting the market for computer processors by reducing the incentive for PC manufacturers to install processors of competitors. The Court underlined in a number of respects the strict standard applied by the Commission on exclusivity strategies pursued by market-dominant companies:

• Exclusivity rebates are deemed abusive because they are not based on an economic transaction but are granted to reward the loyalty of the customers. They are in their nature therefore capable of restricting competition and render market entry more difficult;
• it is therefore not necessary to assess in each individual case whether a restrictive effect arises. The theoretical capability is deemed sufficient to establish an abuse of a dominant position.
• In particular, it is not necessary to prove that competitors could no longer cover the costs if they offered similar rebates. It is not necessary to prove that the rebates render access to the market economically impossible, rather it is sufficient that entering a market becomes more difficult.
• Payments to chain stores are also capable of  foreclosing the market, even though these are active on a subsequent level of the supply chain. The Commission is therefore not obliged, in the particular case, to prove that the payments actually restrict competition.

The decision is in line with previous Court judgments and the Commission decisions according to which discounts granted by dominant companies can be abusive if they go beyond pure quantity and functional rebates.