What happened?

Last week the European Court of Justice ("ECJ") set aside a General Court ruling that had upheld a €1.06 billion fine imposed by the European Commission on Intel for abusing its dominant position in the market for x86 central processing units ("CPUs").

Background

In its 2009 decision, the Commission stated that rebates granted in exchange for exclusivity were per se abusive, and at the same time applied an "As-Efficient-Competitor" test ("AEC test") to conclude that Intel's rebate scheme constituted an abuse capable of foreclosing its main competitor. The General Court confirmed the decision; however, it discarded the need to apply the AEC test, stating that it was unnecessary to consider the effects of rebates.

Main Significance

The Intel case (C-413/14 P) has prompted a lot of debate on whether loyalty/exclusivity rebates are per se abusive, or if their effects on competition should be assessed in abusive conduct cases. The ECJ decision tilts the balance towards the latter, which will make it more difficult for the Commission and national competition authorities to pursue rebate cases.

Main Insights

The ECJ decision clarifies that, when examining whether loyalty rebates are capable of restricting competition, the Commission must examine all circumstances of the case, including (i) the extent of the dominant position; (ii) the share of the market covered by the rebates; (iii) the conditions, duration, and amount of the rebates; and (iv) whether the company had a strategy aimed at excluding efficient operators. The ECJ also expressly confirmed that efficiencies can be taken into account in abusive conduct cases. The ECJ now has referred the case back to the General Court, asking it to assess Intel's argument against the AEC test conducted by the Commission and to determine whether the rebates at issue were capable of restricting competition.