EU Court Backs Intel's Appeal of 2009 Fine, in Blow to Regulator -- Update
September 06 2017 - 7:20AM
Dow Jones News
By Natalia Drozdiak
BRUSSELS--The European Union's highest court on Wednesday backed
Intel Corp.'s appeal of a EUR1.06 billion ($1.26 billion) EU
antitrust fine in 2009, referring the case back to a lower court
and dealing a blow to an antitrust regulator that has taken a hard
line on U.S. tech giants.
The decision could embolden companies challenging the European
Commission, the bloc's antitrust authority, in court over
competition decisions--cases the regulator typically wins. It could
also force the commission to re-examine its strategy in several
ongoing cases.
The Intel case centers on whether a dominant company--in any
industry--abuses its commercial power by offering rebates to
business customers to retain their market position. The European
Commission in 2009 argued that Intel violated the bloc's antitrust
rules because dominant companies' use of rebates are by nature
restrictive of competition.
The European Court of Justice's decision signals that dominant
companies' use of rebates aren't de facto problematic, meaning that
regulators may now have to prove in each case that the rebate
measures offered cause economic harm. That could make it harder for
the commission when it seeks to lodge another such antitrust
case.
It could also give dominant companies more freedom over how they
offer rebates and discounts. As a result, it may also
unintentionally make rules for compliance murkier.
The ECJ said in a statement that the lower court failed to
examine whether Intel's rebates to other companies restricted
competition.
The ruling could have ramifications for other cases, including
the regulator's antitrust probe into Qualcomm Inc., which it
accuses of illegally paying Apple Inc. to exclusively use its chips
and selling chips below cost to force a competitor, Icera Inc., out
of the market. The EU is also probing Alphabet Inc.'s Google over
concerns it abuses its dominance with its Android operating service
by strong-arming phone makers and telecom companies into favoring
Google's search engine and browser on their devices.
"The commission takes note of today's ruling by the European
Court of Justice and will study the judgment carefully," the
commission said. "It is now for the general court to review the
commission decision under the framework set out by today's
judgment."
Intel didn't immediately respond to a request for comment.
In the Intel case, the commission penalized the company over
rebates it granted to four major computer manufacturers--Dell Inc.,
Hewlett-Packard Co., NEC Corp. of Japan and Lenovo Group--for using
its microchips between 2002 and 2007.
The antitrust authority found that Intel had used the rebates,
coupled with its dominant position, to lock rival Advanced Micro
Devices Inc. out of the market, reducing 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.
While the commission argued the company's rebates were by their
nature anticompetitive, it also carried out an in-depth analysis of
the circumstances, proving the rebate scheme was capable of
shutting out a rival.
Intel appealed the decision to the EU's general court. The court
in 2014 backed the commission's first argument that dominant
companies' rebates are by nature potentially anticompetitive--a
decision Intel then appealed to the ECJ.
Write to Natalia Drozdiak at natalia.drozdiak@wsj.com
(END) Dow Jones Newswires
September 06, 2017 07:05 ET (11:05 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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