On September 6, 2017, the European Court of Justice (“ECJ”) reversed a 2014 General Court decision upholding the European Commission’s €1.06 billion judgment against chip maker Intel. But the ECJ reversed the General Court, concluding that it failed to take into account some of the argument put forth by Intel. The ECJ effectively held that the General Court had taken an inappropriate shortcut and has ordered the General Court to reconsider Intel’s As-Efficient competitor (“AEC”) arguments. While the ECJ was concerned that all arguments were not addressed, none of the European institutions involved in this matter appear to be concerned about a process that is now about to leave its adolescence, going into its eighteenth year. One wonders about the efficacy of an antitrust process that requires eighteen years to adjudicate.
In 2000, the European Commission (the “Commission”), initiated an investigation into whether Intel abused a dominant position by: (1) granting rebates to computer manufacturers that were conditioned on the manufacturer’s each purchasing all or almost all of their microprocessors from Intel; and (2) making payments to computer manufacturers designed to delay, cancel, or restrict the marketing of certain products equipped with competitors’ microprocessors. The Commission concluded that Intel abused its dominant position and its rebate programs foreclosed competition. The Commission rejected Intel’s AEC arguments, concluding that an “as-efficient competitor” would have had to offer prices that would not have been viable and that, accordingly, the rebate scheme at issue was capable of having foreclosure effects on such a competitor. The General Court upheld the Commission’s decision, finding that the Commission established that the exclusivity rebates and payments were capable of restricting competition but held that it was not necessary to consider whether the Commission had properly carried out the AEC test.
In reversing, the ECJ noted that in cases where a company submits evidence that its conduct was not capable of restricting competition:
[T]he Commission is not only required to analyze, first, the extent of the undertaking’s dominant position on the relevant market and, secondly, the share of the market covered by the challenged practice, as well as the conditions and arrangements for granting the rebates in question, their duration and their amount; it is also [re]quired to assess the possible existence of a strategy aiming to exclude competitors that are at least as efficient as the dominant undertaking from the market.1
Accordingly, the ECJ referred the case back to the General Court to examine, in the light of the arguments put forward by Intel, whether the rebates at issue are capable of restricting competition.
This case marks a rare reversal of a Commission decision. Between 2012 and 2016, the ECJ totally or partially set aside a case on appeal and referred it back to the General Court only forty-five times of 770 appeals.2 Similarly, the ECJ set aside General Court decisions on appeal (with either referral or no referral) only 15% of the time on average in that same timespan.3
The decision also marks a setback to European antitrust authorities, which have been aggressively pursuing technology companies for competition-related conduct in recent years. The Commission imposed a record €2.4 billion fine against Google in 2014 for allegedly giving its online shopping service preference over its rivals, demanded that Apple repay roughly $14.5 billion in back taxes in Ireland, and is currently investigating chip maker Qualcomm for possible abuse of a dominant market position. With this decision, the ECJ has sent a signal that competition-related decisions will need to be well-supported by the European court system, which may now need to consider allocating its resources more judiciously. The decision also gives encouragement to companies that their conduct will be thoroughly reviewed if they come under investigation.