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EU competition chief Margrethe Vestager hadn’t taken up her post in Brussels when the European Commission imposed a billion-euro antitrust fine on Intel, but she now has to pick up the pieces. a legal debacle that could influence the fate of its Google antitrust case sadness.
The EU first instance court last week overturned the fine imposed on Intel in 2009 and hammered away most of the Commission’s arguments. According to competition experts, the decision could signal problems for ongoing cases, including the legal fight against the biggest antitrust fine ever imposed by the EU: the 4.34 billion euro fine imposed on Google by Vestager for abusing the dominance of its Android operating system.
The court’s harsh ruling represents a painful blow for the Commission, which had not lost a major antitrust case in more than 20 years. It signals the Commission is facing tougher scrutiny from Luxembourg judges, while critics say the decades-long case shows antitrust procedures need an overhaul. Intel’s victory also comes at a sensitive time: the US chipmaker is planning a multibillion-dollar expansion in Europe as the bloc tries to boost its semiconductor production amid global shortages.
“The main consequences of this judgment could be on the Android case, where exclusivity agreements play an important role,” said Friso Bostoen, an expert in competition law at the University of Leuven.
When the European Commission’s competition arm, then headed by Neelie Kroes, fined Intel for abusing its dominant position in the x86 processor market between 2002 and 2007, rebates were at the heart of the matter. The company engaged in anti-competitive practices to exclude its then main rival, the Commission said in 2009, by offering illegal rebates and payments to computer makers and retailers for not using not its rival’s products.
But the EU General Court criticized the Commission’s assessment of Intel’s actions in the case.
“The Commission’s analysis is incomplete and does not establish to the requisite legal standard that the disputed discounts were likely to have, or likely to have, anti-competitive effects,” the court said on Wednesday, nearly 13 years after the fine was imposed.
“This ruling is likely to impact how the court considers other cases, such as the ongoing case over Qualcomm exclusivity rebates,” said Zach Meyers, senior fellow at the Center for European Reform. .
In 2018, Brussels fined chipmaker Qualcomm nearly €1 billion for abusing its dominant market position and making payments to Apple, one of its main customers, for ensure that it was not sourcing chips from Qualcomm’s competitors. The company’s appeal against the fine is still before the courts.
It doesn’t bode well for the Android case either, at least the part relating to the EU’s findings on the exclusivity contracts Google entered into with mobile device makers and telecom operators between 2011 and 2014. These contracts meant that Google shared a portion of its search revenue. with companies that have agreed to exclusively pre-install Google Search across their entire portfolio of Android devices. It’s one of the types of deals that have allowed Google to cement its dominance in search, according to the Commission.
During a week-long hearing last year, the Commission’s analysis these revenue-sharing agreements have been the subject of particular scrutiny by the Luxembourg court.
“Revenue-sharing agreements are even more at risk than they seemed at the hearing, when some judges were quite skeptical of the Commission’s analysis on this point,” Bostoen said. “It’s clear now that this is the weakest point of the Android box.”
While in the past the court tended to opt for a lighter approach to economic analysis, the Intel case indicates that Luxembourg judges were willing to examine all the details of the decisions from Brussels, experts said. This decision suggests that the judges carry out a more thorough examination of EU cases.
“This ruling means the Commission has to do a lot of work to be able to prove anti-competitive effects,” Meyers said.
The Commission “cannot simply say that some rebates are always anti-competitive, and it cannot rely on a crude ‘back of the envelope’ analysis. It takes detailed and robust analysis to prove they have anti-competitive effects,” Meyers added.
Intel’s victory could also spur other companies to challenge the Commission in court, especially in cases where it says behavior is inherently anti-competitive.
“So far, Commissioner Vestager has taken a very different approach from her predecessor: settlements have been ruled out,” said Nicolas Petit, a professor at the European University Institute in Florence. “This judgment could change that. Deeper analyzes mean that antitrust cases will require more resources, while the parties will have a stronger hand in convincing the Commission to settle.
Intel’s move comes as the bloc discusses a set of new regulations aimed at limiting the power of Big Tech companies. Experts say this could give new impetus to legislative efforts to change competition rules with the Digital Markets Act.
Intel’s victory crowns, for now, a long legal saga. In 2014, the lower EU court dismissed the US chipmaker’s appeal. This decision was overturned by the European Court of Justice which, in a 2017 judgment, referred the case back to the General Court to examine Intel’s arguments.
Intel welcomed the court’s decision “because we have always believed that our rebate actions were legal and did not harm competition,” said General Counsel Steve Rodgers. “The semiconductor industry has never been more competitive than it is today and we look forward to continuing to invest and grow in Europe.”
More than 20 years after the initial complaints, the ball is now in Vestager’s court. The EU competition czar said the Commission will have to study “what we can learn from the decision” before deciding on its next steps.
Apart from a recourse in return at the European Court of Justice, an alternative for the Commission would be to redo the investigation, taking into account the guidelines of the court. Both options would prolong the saga even further.
“What we need is an urgent acceleration of antitrust proceedings,” said BEUC’s director of legal and economic affairs, Agustín Reyna.
“It can’t take that long to conclude a case in which such serious competition concerns are raised.”
Simon Van Dorpe contributed to this story.
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