Brussels, 12/06/2014 (Agence Europe) - On Thursday 12 June, the General Court of the EU (ruling in case T-286/09) upheld the record fine of $1.06 billion handed down by the European Commission in May 2009 to the American company Intel for having tried to drive from the market the x86 processors of its main and virtually sole competitor, AMD, by implementing a strategy of exclusivity discounts and financing granted to its own clients between 2002 and 2007 (see EUROPE 9901/9).
The European judges rejected, point by point, all of the arguments put forward by Intel to call for this decision to be cancelled or, at least, the fine to be reduced.
In their verdict, they note that the discounts granted by Intel to four of its clients - the computer manufacturers Dell, HP, NEC and Lenovo - to use only Intel x86 processors were indeed “exclusivity discounts” which, in light of Intel's dominant position (70% of the market in question), were not based on an economic service, but aimed to “suppress or restrict the possibility for the purchaser freely to choose sources of supply and to bar access to the market for other producers”. The General Court therefore took the view that these discounts granted by a company in a dominant position “have, by their very nature, the ability to restrict competition and wipe rivals from the market”. It is therefore not necessary to demonstrate this capacity on a case-by-case basis and the Commission was not obliged to do so in this case. In this regard, the General Court stated that when a dominant companies such as Intel grants discounts of this kind, a competitor wishing to submit an attractive offer is not only obliged to take account of market conditions, but also to offset the fact that Intel's client could lose exclusivity discounts for having chosen to buy from that competitor. On these bases, the Commission was not, contrary to Intel's argument, obliged to carry out an assessment of the circumstances of the case in order to demonstrate that the discounts granted by Intel had the concrete and potential effect of wiping competitors from the market, irrespective of their capacity to continue on the market in spite of the discounts (which overturns Intel's argument that the Commission's analysis of the competitors' capacities does not satisfy the AEC (as efficient competitor) test (see EUROPE 11097).
The General Court applied the same line of argument to the payments made by Intel to the distributor Media-Saturn to sell only computers fitted with processors of its brand. Here again, the Commission was not obliged to examine whether, in this specific case, these payments could restrict competition, but only had to prove that Intel had agreed a financial incentive subject to an exclusivity condition, which it certainly had.
As regards the payments made to the manufacturers HP, Acer and Lenovo, to delay, cancel or restrict the sales of certain products fitted with AMD processors, the General Court notes that these measures were anti-competitive practices constituting an abuse of dominant position and that they were designed to make it harder for AMD to access the market.
On the basis of all of these elements, the General Court concludes that the Commission has demonstrated that Intel tried to disguise the anti-competitive nature of its practices and implemented an overarching long-term strategy to bar AMD's access to the major sales channels.
Lastly, as regards the level of the fine (€1.06 billion), the General Court concludes that Intel has failed to demonstrate that this was disproportionate. Quite the contrary, according to the European judges, the amount is entirely appropriate given the seriousness of the facts. It corresponds to 5% of the value of the sales of x86 processors invoiced by Intel to companies in the EEA in the final year of the infringement (whereas the Commission could in fact have gone up to 30% of this value) and to 4.15% of the annual turnover of Intel (and the Commission could have gone as high as 10%).
The spokesperson to the Commissioner for Competition welcomed the verdict on behalf of the Commission: “the Commission was right to take action against Intel's anti-competitive behaviour on the market (…) The Commission will continue to take action against abuses of dominant position which harm competition on the market and ultimately harm the interests of consumers.” (FG)