The European Commission must offer more evidence when finding that loyalty rebates are anticompetitive after the European Court of Justice (ECJ) confirmed a lower court annulment of the executive's 2009 decision to fine US tech giant Intel €1.06 billion for abusing its dominant position.
The case pitted the US chip manufacturer against EU antitrust officials over rebate schemes that Intel granted to computer businesses Dell, Hewlett-Packard Co, NEC and Lenovo provided they buy its computer chips (x86 CPU) exclusively.
The Commission deemed that Intel's rebates had the effect of foreclosing market competition from Advanced Micro Devices (AMD) relying on a presumption that enabled it to assume the negative impact of such rebates.
But in Thursday’s ruling, the European judges confirmed that the Commission must examine the actual effect on competition of rebates rather than relying on a presumption that they infringe EU law.
“Although the grant of loyalty rebates by an undertaking in a dominant position may constitute an infringement of Article 102 TFEU, the fact that that undertaking submits, during the administrative procedure, on the basis of supporting evidence, that its conduct was not capable of restricting competition and, in particular, of producing the alleged foreclosure effects requires the Commission to carry out an analysis to determine the existence of that capability,” the judges ruled.
The ECJ added that the Commission’s analysis must not only cover the company’s dominant position on the relevant market, the share of the market covered by the rebates, their duration and their amount, “but also the possible existence of a strategy aiming to exclude competitors that are at least as efficient as that undertaking from the market.”
“This ruling is a strong endorsement of the effect-based approach, which will have systemic consequences,” White & Case competition partner Assimakis Komninos told Euronews, referring to the need for the Commission to adduce evidence in such cases.
He said that the judgment contradicted Commission guidelines published last August on abuse of dominance by Europe’s antitrust enforcer, which touted a presumption-based approach for fidelity rebates.
“The judgment doesn’t agree with the Commission’s guidelines,” Komninos said, “as the Commission will have to take into account economic evidence”.
The Commission merely said in a statement that it "took note of today’s judgement of the European Court of Justice”.
If this ruling puts an end to nearly 20 years of legal battle between Intel and the Commission on rebates schemes, the saga is not yet over as another case is pending before the European judges on “naked restrictions”, through which Intel paid computer manufacturers to delay the launch of products containing competitors’ chips.
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