European Court of Justice Says the General Court Cannot Take Shortcuts in 18-Year-Old Antitrust Case
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.
1 Case C-413/14 P, Intel Corp., Inc. v. European Comm’n,
(ECJ Sept. 6, 2017) at ¶ 139.
2 See Court
of Justice of the European Union, 2016 Annual Report 222 (2016), https://curia.europa.eu/jcms/upload/docs/application/pdf/2017-03/ra_jur_2016_en_web.pdf.
3Id.
