Competition: General Court dismisses Intel’s action in its entirety and upholds the Commission’s decision fining Intel for abuse of dominant position

On 12 June 2014, the General Court (“GC”) handed down its judgment dismissing an appeal brought by Intel Corporation (“Intel”), an American microchip manufacturer, against the Commission’s decision of 9 May 2009 imposing a fine of EUR 1.06 billion on Intel, for having abused its dominant position on the market for x86 central processing units (“CPUs”), in violation of the EU competition rules. The Commission had found that Intel, a company holding a market share of roughly 70 % or more, had engaged in two specific forms of illegal practices aimed at foreclosing from the market its only serious competitor, Advanced Micro Devices (“AMD”). First, Intel gave wholly or partially hidden rebates to four computer manufacturers (Dell, HP, NEC and Lenovo) on condition that they bought all, or almost all, their x86 CPUs from Intel. Intel also made direct payments to a major retailer Media-Saturn Holding GmbH (“MSH”) on condition that it would stock only computers with Intel x86 CPUs. Second, Intel made direct payments to computer manufacturers (HP, Acer and Lenovo) to halt or delay the launch of specific products containing competitors’ x86 CPUs and to limit the sales channels available to these products. In its judgment, the GC confirmed the Commission’s view that the rebates granted to Dell, HP, NEC and Lenovo were exclusivity rebates which were incompatible with the objective of undistorted competition within the common market and were designed to remove or restrict the purchaser’s freedom to choose his sources of supply. Further, given that exclusivity rebates granted by an undertaking in a dominant position are, by their very nature, capable of restricting competition and foreclosing competitors from the market, the Commission was not required to show, in its analysis of the circumstances of the case, that the rebates granted by Intel were capable of foreclosing AMD from the market. As regards the payments granted to MSH, the GC found that the same anti competitive mechanism was in place as with the practices adopted vis-à-vis the computer manufacturers, but at a stage further down the supply chain. The Commission was thus not required to examine, in the light of the facts of the case, whether those payments were such as to restrict competition but it was only required to demonstrate that Intel had granted a financial incentive which was subject to an exclusivity condition. As regards the payments made to HP, Acer and Lenovo for them to postpone, cancel or restrict the marketing of certain products equipped with AMD CPUs, the GC confirmed that those payments were capable of making access to the market more difficult for AMD and therefore amounted to an abuse of a dominant position. According to the GC, Intel pursued an anti-competitive object, since the only interest that an undertaking in a dominant position may have in preventing in a targeted manner the marketing of a competitor’s products is to harm that competitor. Furthermore, the GC held that the Commission had correctly demonstrated that Intel had attempted to conceal the anticompetitive nature of its practices. Finally, the GC confirmed that the fine imposed on Intel was appropriate. Accordingly, the GC dismissed Intel’s action in its entirety and fully confirmed the Commission’s findings. Source: General Court Press Release 12/06/2014

Competition: General Court annuls partially the Commission’s CISAC decision on concerted practice

On 12 June 2014, the Court of Justice of the European Union (“CJEU”) handed down its judgment on an appeal lodged by Deltafina SpA (“Deltafina”), the leading Italian processor of raw tobacco, against the General Court’s (“GC”) judgment which upheld its liability for the Italian raw tobacco cartel. In October 2005, the Commission imposed a fine of EUR 30 million on Deltafina for its participation in a cartel in the Italian raw tobacco market between 1995 and 2002, in violation of Article 101(1) of the Treaty on the Functioning of the European Union (“TFEU”). Deltafina had originally been granted conditional immunity under the terms of the 2002 Leniency Notice but this immunity was withheld due to Deltafina’s failure to meet its ongoing co-operation obligations. The Commission had found that Deltafina revealed to the companies involved in the cartel that it had applied for leniency before the Commission had the opportunity to carry out investigations into the cartel. Deltafina lodged an appeal before the GC to challenge the Commission’s decision but the GC dismissed the appeal in its entirety after which Deltafina brought the case before the CJEU. In its judgment, the CJEU rejected Deltafina’s arguments that the GC had erred in its assessment of Deltafina's duty to co-operate under the 2002 Leniency Notice. According to the CJEU, the fact that Deltafina had disclosed its immunity application without telling the Commission constituted a breach of the duty to co-operate. Furthermore, the CJEU rejected Deltafina’s argument that the GC had infringed the company's right to a fair hearing. The CJEU held that although the GC breached its rules of procedure in taking witness evidence, this did not constitute an infringement of Deltafina's right to a fair hearing. The GC took the witness statements into account only in respect of a superfluous point, its reasoning being based essentially on written evidence. According to the CJEU, the GC was able to base its findings on that written evidence alone. Finally, the CJEU rejected Deltafina’s claim that the GC infringed Articles 41(1) and 47 of the Charter of Fundamental Rights of the European Union by failing to adjudicate within a reasonable time. The CJEU ruled that while the GC had failed to adjudicate within a reasonable time, this could not lead to the annulment of its judgment. Rather, it gave Deltafina a right to bring an action for damages. Accordingly, the CJEU dismissed Deltafina's appeal in its entirety. Source: Judgment of the Court of Justice of the European Union C-578/11P – Deltafina SpA v European Commission, 12/06/2014

Competition: General Court annuls partially the Commission’s CISAC decision on concerted practice

On 21 January 2014, Swedbank Franschise AB (‘’Swedbank’’) notified its acquisition of all shares (‘’Acquisition’’) in Svensk Fastighetsförmedling AB (‘’SF’’) to the Swedish Competition Authority (‘’SCA’’). The Acquisition was not notifiable under the merger control rules in the Swedish Competition Act, but the SCA used its power to request a notification. SF and Swedbank both operate as real estate agents on the Swedish market. Swedbank, through its subsidiary Swedbank Fastighetsbyrå, is currently the leading brand on the market, with a national market share of approximately 21 per cent and SF is the second largest brand with a national market share of approximately 15 per cent. Hemnet is a website that is partly owned by Swedbank and SF. The website focuses on compiling a vast amount of up-to-date real estate advertisements and is considered to be the leading real estate website on the Swedish market. Post acquisition, Swedbank will control 50 per cent of Hemnet combined with additional control via its membership in the Real Estate Agents Association. The SCA resolved on 18 March 2014, to open an in-depth investigation and has on 17 June 2014 announced that it has initiated proceedings to prohibit the transaction before the Stockholm District Court. Source: Swedish Competition Authority Press Release 17/06/2014

Competition: General Court annuls partially the Commission’s CISAC decision on concerted practice

The Umeå Administrative Court recently announced its judgment in the case between the Swedish Competition Authority (‘’SCA’’) and Akademiska Hus AB (‘’Akademiska Hus’’). Akademiska Hus is wholly-owned by the Swedish state and owns properties that are rented out to Swedish Universities. The SCA has pursued several lawsuits against Akademiska Hus concerning the company's obligation to apply the Swedish Public Procurement Act. The procurement in question was for construction works at the Swedish University of Agricultural Sciences in Umeå, a contract worth approximately SEK 39 million. The SCA found that the procurement in question had been conducted unlawfully. The Umeå Administrative Court shared the SCA's assessments in all the key issues and has now ordered Akademiska Hus to pay SEK 3 million (7.7 % of the contract sum) in procurement award damages for not complying with Swedish law. The decision is subject to appeal to the Administrative Court of Appeal. Source: The Swedish Competition Authority Press Release 10/06/2014 & Judgment of Umeå Administrative Court 1643-12, 10/06/2014

In addition, kindly note the following merger control decisions by the Commission which are published on the website of the Commission’s Directorate-General for Competition:

  • Commission approves acquisition of part of Honeywell's friction material business by rival Federal- Mogul, subject to conditions
  • Commission approves acquisition of joint control over Tecgas and COGA by Graña y Montero, Enagás and Canada Pension Plan Investment Board
  • Commission approves acquisition of joint control over Scholz by Toyota Tsusho Corporation and the Scholz family shareholders
  • Commission approves acquisition of SHELL Italia and SHELL Italia Aviazione by Kuwait Petroleum
  • Commission approves acquisition of Gates by Blackstone
  • Commission approves acquisition by Centrica of Bord Gais Energy
  • Commission approves acquisition of ParexGroup by CVC