In its judgment of 26 January 2022 (Intel Corporation, T-286/09 RENV), the General Court partially annuls the Commission decision finding that Intel abused its dominant position by granting conditional rebates on original equipment manufacturers (“OEMs”) with a view of excluding competitors from the computer chips market. The General Court, following the legal framework established by the Court of Justice, considers that the economic analysis carried out by the Commission is incomplete and does not make it possible to establish that the rebates at issue were capable of having, or likely to have, anticompetitive effects.
The Intel case dates back to 2009 when the Commission issued a decision imposing a 1.06 billion EUR fine on Intel for abuse of its dominant position by implementing a strategy intended to exclude competitors from the market. The abuse was characterised by two types of commercial conduct engaged in by Intel vis-à-vis its trading partners:
- Naked restrictions, consisting of making direct payments to OMEs on the condition that they would postpone or cancel the launch of specific products containing competitors’ chips;
- Conditional rebates, consisting of granting rebates to OEMs which were conditional on the OEMs purchasing all or almost all of their chips from Intel (fidelity rebates).
With regard to the second type of conduct, the Commission relied on the assumption that fidelity rebates granted by undertakings in a dominant position are by their very nature capable of restricting competition, with the result that it was not necessary to analyse all the circumstances of the case or to carry out an as-efficient-competitor (“AEC”) test. Nevertheless, as Intel had argued during the administrative procedure, based on supporting evidence, that the rebates concerned were not capable of foreclosing the market, the Commission did carry out, in its decision, an in-depth examination of those circumstances, which led it to conclude that an as-efficient competitor would have had to offer prices which would not have been viable and that, accordingly, the rebate scheme at issue was capable of having foreclosure effects on such a competitor.
Intel brought an action against the Commission decision. That action was dismissed in its entirety by the General Court in its judgment of 12 June 2014. The General Court relied on the assumption that fidelity rebates granted by a firm in a dominant position are unlawful and considered that it was not necessary to examine all of Intel’s arguments concerning the AEC test and how the Commission had applied it.
By its judgment of 6 September 2017, on the appeal brought by Intel, the Court of Justice set aside the General Court’s judgment, considering that the AEC test had played an important role in the Commission’s assessment with the result that the General Court was required to examine that question. It therefore referred the case back to the General Court in order for it to examine, in the light of the arguments put forward by Intel, the capability of the rebates at issue to restrict competition.
In its judgment of January 2022, the General Court applies the legal principles defined by the Court to assess fidelity rebates. Accordingly, the General Court recalls that the restrictive effects on competition associated with fidelity rebates constitute a mere presumption, which cannot relieve the Commission, in any event, of the obligation to conduct an analysis of anticompetitive effects. Where the company concerned submits during the administrative procedure and on the basis of supporting evidence that its conduct was not capable of restricting competition, it is incumbent on the Commission to analyse whether the rebates are in fact capable of having a foreclosure effect. In the context of that analysis, it is for the Commission to analyse the extent of the undertaking’s dominant position on the relevant market, the share of the market covered by the contested practice, the conditions and arrangements for granting the rebates in question, their duration and their amount as well as the possible existence of a strategy intended to exclude at least as-efficient competitors. While an AEC test is not obligatory, if the Commission has carried out that test, it is one of the factors which must be taken into account in order to assess whether the rebate is capable of restricting competition.
The General Court therefore finds that the Commission erred in law in the contested decision in concluding that the rebates at issue were by their nature anticompetitive with the result that there was no need to demonstrate foreclosure capability in order to establish an infringement of Article 102 TFEU and that it was therefore not required (although it did it) to carry out an additional analysis in order to conclude that those rebates were abusive.
The General Court also places particular emphasis on the burden of proof and standard of proof that the Commission must satisfy in order to establish an infringement of the competition rules. In particular, it recalls the principle of the presumption of innocence which requires the Commission to establish the existence of an infringement of competition law, where necessary by means of a precise and consistent body of evidence, so as to leave no residual doubt in that regard. Where the Commission maintains that the established facts can be explained only by anticompetitive behaviour, it must be found that the infringement at issue has not been sufficiently demonstrated if the undertakings concerned put forward a separate plausible explanation of the facts. However, where the Commission relies on evidence which is, in principle, capable of demonstrating the existence of an infringement, it is for the undertakings concerned to demonstrate that the probative value of that evidence is not sufficient. In case of doubt, the benefit should go to the defendant.
The General Court then examined Intel’s arguments regarding the errors allegedly made by the Commission in its AEC analysis and concludes that some of the evidence put forward by Intel give rise to doubts as to the correctness of the Commission’s analysis and as to whether the rebates were capable of having a foreclosure effect. The General Court therefore finds that the analysis carried out by the Commission is incomplete and, in any event, does not make it possible to establish to the requisite legal standard that the rebates at issue were capable of having, or were likely to have, anticompetitive effects.
Consequently, the General Court annuls the Commission decision, insofar as it finds that the rebates granted by Intel to OEMs constitute an abuse of a dominant position. With regard to the impact of that partial annulment on the fine imposed on Intel, as the General Court is not in a position to identify the amount of the fine which relates solely to the other part of Intel’s conduct, the so-called naked restrictions, it decides to annul in its entirety the article of the contested decision which imposes on Intel a fine of 1.06 billion EUR in respect of the infringement found.
This judgment is of particular importance as it confirms that the Commission must carry out rigorous and careful analysis of anticompetitive foreclosure effects and cannot rely on a formalistic approach based on “presumptions” of competitive harm.
Please contact Pierre de Bandt or Jeroen Dewispelaere for further information about this case and/or for general legal advice relating to competition law.