European Court of Justice Ruling on Intel’s Loyalty Rebates: Implications for Antitrust Enforcement
The European Commission is required to provide more substantial evidence when determining whether loyalty rebates are anticompetitive, following a significant ruling by the European Court of Justice (ECJ). This decision confirmed a previous lower court’s annulment of the Commission’s 2009 verdict, which imposed a hefty fine of €1.06 billion on the American technology giant Intel for allegedly abusing its dominant market position.
The case revolved around rebate schemes that Intel offered to major computer manufacturers, including Dell, Hewlett-Packard Co, NEC, and Lenovo, contingent upon their commitment to exclusively purchase its x86 computer chips. The Commission’s stance was that these rebates effectively stifled competition from rival chipmaker Advanced Micro Devices (AMD). The Commission relied on a presumption that allowed it to assert the negative impact of these rebates without thoroughly examining their actual effects on market competition.
In its ruling on Thursday, the ECJ emphasized that the Commission must rigorously analyze the real impact of these loyalty rebates on competition, rather than depending solely on presumption. The judges stated, “While the provision of loyalty rebates by a dominant company may be an infringement of Article 102 TFEU, if that company presents evidence during the administrative process showing that its actions did not restrict competition or produce the alleged foreclosure effects, the Commission is obligated to conduct a detailed analysis to ascertain the existence of such capability.”
The ECJ insisted that the Commission’s investigation should encompass not only the company’s dominant position within the relevant market but also consider factors such as the market share affected by the rebates, the duration and size of the rebates, and importantly, the potential existence of a strategy aimed at excluding equally efficient competitors from the marketplace.
Assimakis Komninos, a partner in the competition practice at White & Case, remarked to Euronews that “This ruling strongly supports an effect-based approach, which will have far-reaching implications.” He pointed out that the judgment contradicts the Commission’s guidelines released last August, which advocated a presumption-based approach for fidelity rebates. “The judgment does not align with the Commission’s guidelines,” Komninos noted, “as the Commission will now need to consider economic evidence in its evaluations.”
In response to the ruling, the European Commission simply acknowledged in a statement that it “took note of today’s judgement of the European Court of Justice.” While this decision may conclude nearly two decades of legal disputes between Intel and the Commission regarding rebate schemes, the saga is not entirely over. Another case involving “naked restrictions” is still pending before the European judiciary. In this case, Intel is accused of paying computer manufacturers to postpone the release of products featuring competitors’ chips.
