The European Commission re-imposed on 22 September a fine of around EUR 376.36 million on Intel for a previously established abuse of dominant position in the market for computer chips called x86 central processing units (‘CPUs’).
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What did the Commission decide in 2009?
On 13 May 2009, the Commission fined Intel 1.06 billion for abusing its dominant position in the market for computer chips called x86 central processing units (‘CPUs’).
In particular, the Commission found that Intel had abused its dominant position by (i) giving wholly or partially hidden rebates to computer manufacturers on condition that they bought all, or almost all, their x86 CPUs from Intel (so-called ‘conditional rebates’); and (ii) paying computer manufacturers to halt or delay the launch of specific products containing competitors’ x86 CPUs and to limit the sales channels available to these products (so-called ‘naked restrictions’).
What did the courts rule in the different instances?
In 2014, the General Court dismissed Intel’s appeal against the 2009 Commission’s decision (T-286/09).
Following an appeal by Intel, in 2017 the Court of Justice of the European Union (‘Court of Justice’) annulled the 2014 General Court’s judgment and referred the matter back to the General Court (C-413/14 P). At the same time, the Court of Justice clarified the conditions to establish when conditional rebates may amount to an infringement of EU competition rules. The Court of Justice asked the General Court to review whether the conditional rebates were capable of restricting competition in view of certain economic evidence Intel had relied on before the General Court in 2014.
In 2022, the General Court ruled again on the matter and annulled the part of the 2009 Commission’s decision concerning the conditional rebates, but confirmed the unlawfulness of Intel’s naked restrictions (T-286/09 RENV). The General Court also annulled the fine imposed on Intel in its entirety after concluding that it could not establish the amount of the fine relating only to the naked restrictions.
What is the status of the different proceedings?
The Commission has appealed the part of the 2022 judgment of the General Court concerning the conditional rebates before the Court of Justice (C-240/22 P). The appeal is pending. Given that the part of the 2022 General Court judgment concerning the naked restrictions has not been appealed by Intel, it has become final.
Why has the Commission adopted a decision to fine Intel for the naked restrictions and has not waited until the Court of Justice rules on its appeal against the 2022 judgment of the General Court?
Intel has not appealed the part of the 2022 judgment of the General Court upholding the Commission’s finding about the unlawfulness of Intel’s naked restrictions, which has therefore become final. The Commission is therefore entitled to re-impose a new fine on Intel.
What are naked restrictions and why are they a serious infringement of competition law?
As established in the 2009 Commission’s decision, the naked restrictions consisted in certain payments made by Intel to computer manufacturers (i.e., 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. More specifically:
- Between November 2002 and May 2005, Intel made payments to HP conditional upon HP selling business desktops based on the x86 CPUs of its competitor AMD (i) only to small- and medium-sized enterprises; (ii) only via direct distribution channels (rather than distributors); and (iii) on HP postponing the launch of its first AMD-based business desktop in Europe by 6 months.
- Intel made payments to Acer conditional upon Acer postponing the launch of an AMD-based notebook from September 2003 to January 2004.
- Intel made payments to Lenovo conditional upon Lenovo postponing the launch of AMD-based notebooks from June 2006 to the end of 2006.
As a result of those restrictions, computer manufacturers halted, delayed or placed restrictions on the commercialisation of products based on a competitor’s chipsets, which they had actively planned and for which there was consumer demand. Intel’s naked restrictions therefore had a detrimental effect on competition in the market, by depriving customers of a choice which they would have otherwise had.
What was the General Court conclusion on naked restrictions?
In its 2022 judgment, the General Court confirmed the unlawfulness of Intel’s naked restrictions. However, the General Court annulled the fine imposed on Intel in its entirety after concluding that it could not establish the amount of the fine relating only to the naked restrictions.
What was the General Court conclusion on the rebates?
In its 2022 judgment, the General Court found the Commission’s assessment of Intel’s conditional rebates to be incomplete and it considered that the decision did not sufficiently demonstrate that those rebates had the capability of restricting competition. The Commission has appealed this part of the judgment before the Court of Justice (C-240/22 P). The appeal is pending.
Does the new decision concern the part of the infringement related to the conditional rebates?
No, it does not. The operative part of the 2009 Commission’s decision regarding the conditional rebates has been annulled in 2022 by the General Court. The Commission has appealed this part of the 2022 judgment before the Court of Justice. The appeal is pending (C-240/22 P).
Has the Commission issued a new Statement of Objections against Intel in the context of its new decision? Has the Commission organised a new Oral Hearing?
The Commission did not need to issue a new Statement of Objections or organise an Oral Hearing in this case. The new decision does not contain any new objections or evidence against Intel, beyond those on which Intel was given an opportunity to be heard and exercise in full its right of defence in the context of the proceedings leading to the adoption of the 2009 Commission’s decision.
After the Commission’s findings related to the unlawfulness of Intel’s naked restrictions became final, in May 2023 the Commission sent a letter informing Intel about its intention to adopt a new decision re-imposing the fine. Intel had the opportunity to reply to the Commission’s letter and its arguments have been taken into account by the Commission in the context of the adoption of the new decision.
A long time has passed since the infringement. Aren’t the limitation periods met?
No. The limitation period has been suspended during the judicial proceedings.
Why is the amount of the fine lower than in the 2009 Commission’s decision?
With today’s decision, the Commission has re-imposed a fine on Intel only for its naked restrictions practice. The fine does not relate to Intel’s conditional rebates practice. The fine amount, which is based on the same parameters as the 2009 Commission’s decision, reflects the narrower scope of the infringement compared to that decision.
Why is the Commission imposing a fine for an infringement that might have had a limited impact in the European Economic Area (‘EEA’) and 15 years after the infringement came to an end?
The Court of Justice has confirmed that the infringement amounted to a serious breach of EU competition rules, with a significant impact in the EEA (C-413/14 P). The Commission is committed to enforcing EU competition rules and ensuring that such anticompetitive practices do not remain unsanctioned.
Has the Commission paid interests to Intel following the annulment of the fine imposed in the 2009 Commission’s decision?
Following the judgment of the General Court of 26 January 2022 in the Intel case, which annulled the fine imposed on Intel by the Commission’s decision of 13 May 2009, the Commission reimbursed Intel the entire fine provisionally paid and the applicable interest. The Commission has taken note of the new actions brought on 28 April and 6 July 2022 by Intel regarding the interest paid. The General Court has decided, in accordance with Article 69(d) of the Rules of Procedure, to stay the proceedings until the final decision of the Court of Justice either in case C-221/22 P, Commission v Deutsche Telekom or in case C-240/22 P, Commission v Intel Corporation, is handed down.
On 22 April 2022, the Commission adopted a proposal for a targeted amendment of the Financial Regulation, proposing, among others, that fines provisionally paid and later annulled or reduced by the Court of Justice of the European Union should be reimbursed with an interest at the rate applied by the European Central Bank to its principal refinancing operations increased by one and a half percentage points, by analogy to the rate of interest that a debtor bears in case of deferred payment of a fine covered by a financial guarantee.
In how many cases has the Commission paid default interest so far?
The Commission paid so far default interest to Printeos (0.18 million), to Deutsche Telekom (1.75 million) and to Campine (0.30 million).
Source: European Commission
