By Tom Fairless
BRUSSELS--The European Union's second-highest court on Thursday
upheld a record EUR1.06 billion ($1.43 billion) fine against Intel
Corp. for abusing its dominant position in the microprocessor
market, marking the latest in a long line of victories for EU
antitrust authorities at the European courts.
The Luxembourg-based General Court threw out "in its entirety"
the U.S.-based chip maker's appeal against a 2009 decision by EU
competition authorities to issue the biggest ever antitrust fine
against a single company.
The court's decision is "a slam dunk" for the European
Commission, the EU's central antitrust authority, that would
embolden EU and national regulators to take action against other
companies engaging in rebate and discounting policies, said Dave
Anderson, antitrust partner in the Brussels office of Berwin
Leighton Paisner LLP.
It could also encourage private parties harmed by similar
conduct to seek redress in EU domestic courts, Mr. Anderson
said.
Intel had argued that the commission's case, was based on
mistakes and ignored evidence. The company said on Thursday that it
was "very disappointed" with the court's decision and would
evaluate the judgment.
It could decide to file one last appeal with the European Court
of Justice, the EU's top court.
In a statement, the commission said that the judgment confirmed
it was "fully justified in pursuing the anti-competitive conduct in
question in a major worldwide market." It said it would continue to
pursue such market abuses "vigorously."
The case centered on rebates that Intel granted to four major
computer manufacturers--Dell Inc, Hewlett-Packard Co., NEC Corp. of
Japan and Lenovo--for using its chips between 2002 and 2007.
The commission's investigation found that Intel had used the
rebates, coupled with its dominant market position, to cut rival
Advanced Micro Devices Inc. out of the market, resulting in less
choice for consumers. The EU also said Intel made payments to
electronics retailer Media Saturn Holding on the condition that it
only sold computers containing Intel's microprocessors.
Intel appealed, arguing that the regulator had cherry-picked
evidence, drawn false conclusions that relied heavily on
speculation found in emails, and ignored evidence that AMD wasn't
harmed.
In its ruling, the court said that the commission had showed, to
a sufficiently high legal standard, that Intel's use of rebates
could restrict competition. It said that the commission didn't need
to show that the rebates actually or potentially shut competitors
out of the market because the nature of the rebates, and Intel's
dominant position, meant that they had an anti-competitive
effect.
The court also rejected Intel's argument that the scale of the
fine was disproportionate. "The fine is equivalent to 4.15% of
Intel's annual turnover, which is well below the 10% ceiling
provided for," the ruling said.
The commission very rarely loses cases in Luxembourg, and
critics complain that the EU courts are overly deferential to the
bloc's executive. A separate investigation by the EU's ombudsman
faulted the commission for failing to take notes of a meeting with
an executive from Dell.
Still, antitrust agencies in the U.S. and Korea have also sided
against Intel with respect to these pricing practices in recent
years.
Big U.S. technology companies have frequently fallen foul of the
EU's antitrust authorities in recent years. The commission said on
Wednesday that it would open formal investigations into tax
practices used by Apple Inc. and Starbucks Corp., warning that the
companies' generous tax deals in Ireland and the Netherlands,
respectively, might amount to illegal aid by governments. Google
Inc. is also embroiled in a long-running EU antitrust investigation
over its dominance of online search.
Corrections & Amplifications
The General Court of the EU threw out the appeal by Intel. An
earlier version of this story stated that the ruling was made by
the European Court of Justice.
Write to Tom Fairless at tom.fairless@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires