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Intel is getting some help in its years-long effort to appeal a $1.4 billion fine levied in 2009 by European antitrust regulators.
The chip maker has appealed the fine up through the European Union judicial system despite a series of setbacks, eventually reaching the European Union (EU) Court of Justice (ECJ). In an opinion this week, ECJ Advocate General Nils Wahl said the case should be sent back to the court that initially ruled against Intel and levied the record fine, questioning whether regulators had proved that rebates the chip maker had given to system makers in Europe had amounted to an abuse of its market dominance and harmed competition.
The European Commission (EC)—the antitrust arm of the European Union—in 2009 fined Intel the $1.4 billion, saying the chip maker abused its market position to illegally try to keep PC makers from using x86 processors from rival Advanced Micro Devices. The General Court ruled that Intel acted improperly in offering loyalty rebates to PC makers like Dell, Hewlett-Packard, Acer, Lenovo and NEC between 2002 and 2005 if they bought all or most of their chips for their systems from Intel.
Intel also was accused of putting stringent restrictions on the other 5 percent of PCs not using its processors, and of paying Media-Saturn, a retail chain in Germany, to only sell systems powered by Intel chips.
As a result, AMD was effectively shut out from participating in the European PC market and deprived PC makers and end users of being able to take advantage of lower prices that may have been available in a more competitive market. Along with the fine, antitrust regulators also ordered Intel to stop offering illegal rebates.
Intel officials have disputed the claims, saying the company competed aggressively against AMD and others but that its business practices never violated antitrust or other laws. They also appealed the fine, saying it was too harsh. The EU General Court in 2014 disagreed, ruling that regulators were correct in their assessments and that the fine was legitimate. The “fine is appropriate in the light of the facts of the case,” the court said at the time in its ruling.
The chip maker appealed to the ECJ in Luxembourg, making its arguments during a hearing June 21.
In his opinion issued Oct. 20, the ECJ’s Wahl agreed with many of Intel’s arguments, saying that the General Court erred in ruling that the rebates and payments the chip maker made to OEMs created a non-competitive environment and harmed AMD or consumers in Europe. At the same time, Wahl also questioned whether deals made between Intel and Lenovo had similar impacts.
“In the light of the nature of the errors committed by the General Court … the state of the present proceedings does not in my view permit final judgment to be given,” Wahl wrote. “That is because a decision on the merits (whether or not the rebates and payments offered by Intel constitute an abuse of dominance contrary to Article 102 TFEU, as well as whether the Lenovo agreements had any immediate, substantial and foreseeable anticompetitive effect within the [European Economic Area]) hinges upon an examination of all the circumstances of the case and … of the actual or potential effect of Intel’s conduct on competition within the internal market. That, in turn, involves an assessment of the facts which the General Court is better placed to carry out.”
Given that, “I propose that the Court should refer the case back to the General Court for a fresh review,” he wrote.
Wahl’s opinion is non-binding, but the ECJ reportedly tends to follow the recommendations of its advisers.
If the fine is eventually overturned, it could have a significant impact on similar cases the European Union is pursuing against other tech vendors, including Apple, Google and Qualcomm.
“The extent to which the advocate general disagrees with the Commission is significant,” Ian Giles, a partner at Norton Rose Fulbright in London, told Reuters. “The advocate general’s opinion says—on the Intel facts—the commission got it wrong. Assuming the court follows this opinion, this is a good outcome from the perspective of competition policy, and may lead to the commission revising its approach in ongoing cases.”