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23rd Sep 2018

Court deals blow to EU anti-trust machine

  • Commission fined Intel €1.1 billion in 2009 (Photo: The Preiser Project)

The EU court has brought the European Commission closer to its first bloody nose on anti-trust fines.

The ruling, on Wednesday (6 September), also indicated that giant tech firms could in future be more free to wield their market power in the form of rebates.

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The European Court of Justice (ECJ), the bloc's highest court, ruled that the General Court, a lower tribunal, should reconsider an appeal by US microchip maker Intel.

The European Commission fined Intel €1.1 billion in 2009.

It did so on grounds that Intel's rebates to loyal customers, such as computer makers Dell and HP, restricted competition because smaller firms could not match Intel's net prices.

Intel appealed, alleging that the Commission made errors in a technical assessment, the so-called "as efficient competitor test".

But the General Court failed to take those allegations into account when it rejected Intel's appeal in 2014.

"The Court therefore sets aside the judgment of the General Court as a result of that failure," the ECJ said on Wednesday.

"The Court refers the case back to the General Court so that it may examine, in the light of the arguments put forward by Intel, whether the rebates at issue are capable of restricting competition", it added.

If the legal process ends up exonerating Intel it would mark the first major defeat for the Commission on anti-trust fines.

The €1.1 billion penalty was at the time the EU's biggest ever.

An Intel victory could have direct bearing on a similar Commission case involving payments by US chip maker Qualcomm to computer firm Apple.

It could also make Apple and other US tech giants, Facebook and Google, less quick to settle in their separate EU disputes by dinting the Commission's invulnerable reputation and by increasing the burden of proof about "restricting competition" on the Commission side.

The Commission has ordered Apple to repay Ireland €13 billion of tax subsidies.

It has fined Facebook €110 million for misleading it over its takeover of WhatsApp, a phone messaging firm.

It has also fined Google €2.4 billion for fiddling online shopping searches and has threatened to fine it €5 billion more on the way it sells its Android operating system.

Wednesday's ECJ ruling rejected Intel's claim that the Commission had acted outside its jurisdiction.

"Intel's arguments alleging that the Commission lacked territorial jurisdiction to penalise the abuse, and alleging procedural irregularities that affected its rights of defence, were rejected by the Court", the ECJ said.

The Commission and Intel said on Wednesday they were analysing the verdict and that it was too early to comment.

The General Court's new treatment of Intel's appeal is likely to add between two to four years to the process, making the case more than a decade old before it is concluded.

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