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European Court of Justice Decision a Good Step Forward

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By Steve Rodgers, Executive Vice President and General Csteven-rodgers_1.jpgounsel of Intel

Earlier today, the European Union’s highest court, the Court of Justice, issued a ruling in Intel’s favor in connection with Intel’s appeal of a 2009 decision by the European Commission (EC) that Intel had violated EC competition law from 2002 to 2007 by engaging in certain pricing and other practices. The court’s judgment overturns a 2014 decision by the European General Court, a lower court in the European court system, that upheld the EC’s decision in its entirety.

Intel has consistently maintained that it disagrees with the EC’s decision and that its conduct complied with EU competition law. At the same time, Intel changed certain business practices to ensure that it fully complies with the EC’s ruling. The lengthy appeals process took a major step in Intel’s favor today, with the ruling that the General Court should have considered whether Intel’s pricing practices were capable of harming competition. The court sent the case back to the General Court for reassessment in light of its holding.

The EC’s 2009 decision held that Intel had violated EU competition law by granting discounts to five PC manufacturers and one retailer that it conditioned on the purchase of all or most of the customer’s microprocessors from Intel. On appeal, the General Court held that these rebates were presumptively unlawful and that there was no need to examine their impact on competition. Today’s judgment reverses that holding.

On appeal to the Court of Justice, Intel argued that only discounts that are capable of excluding an equally efficient competitor are impermissible. It also maintained that, in any event, the share of the market covered by the transactions and the duration of the arrangements were insufficient to exclude competition.

The Court of Justice accepted Intel’s argument that the General Court erred in failing to consider whether the discounts in question were capable of excluding an equally efficient competitor. The court held that the General Court is required to consider “the share of the market covered by the challenged practice, as well as the conditions and arrangements for granting the rebates in question, their duration and their amount; it is also required to assess the possible existence of a strategy aiming to exclude competitors that are at least as efficient as the dominant undertaking from the market.”

Shortly after the EC issued its decision in 2009, Intel paid the €1.06 billion fine that the Commission imposed on it. The judgment does not affect any ongoing business conduct and leaves for further resolution whether some or all of the fine already paid should be refunded to Intel.

Intel welcomes today’s landmark ruling in Intel’s favor. While this case concerns events that happened more than a decade ago, we have always believed that our actions were lawful and did not harm competition. We are gratified that Europe’s highest court has agreed with us on what legal rules should govern Intel’s pricing decisions, in what is an honest and respectful disagreement between Intel and the EC.