Intel lost its appeal against a €1.06 billion (US$1.44 billion) antitrust fine on Thursday when the General Court of the European Union upheld a 2009 ruling by the European Commission that the company had abused its dominant market position.
The Commission had found that Intel had abused its dominant position by offering rebates to customers on the condition they buy all their x86 CPUs from the company.
The General Court dismissed in its entirety Intel’s appeal and ordered the chip giant to implement conditions imposed by the Commission in its original ruling to rectify the market situation.
According to the Commission, with 70 percent or more of the worldwide market, Intel was an “unavoidable supplier” of CPUs, an essential component of any computer.
Prior to 2000 there were several manufacturers of x86 CPUs. However between 2002 and 2007 when the market abuse took place, Advanced Micro Devices (AMD) was the only serious competitor.
Intel granted rebates to computer manufacturers Dell, Lenovo, Hewlett-Packard and NEC, and paid reseller Media-Saturn to sell only computers containing Intel’s x86 CPUs, the Commission had found.
According to the court the exclusivity rebates are by their nature designed to restrict the purchaser’s freedom to choose alternative suppliers. It is was therefore not necessary for the Commission to show that they restrict competition on a case-by-case basis (through a so-called ‘efficient competitor test’) as Intel had argued.
The €1.06 billion fine was the highest ever meted out by the Commission and was determined on the basis of the value of sales of x86 CPUs invoiced by Intel in the EU during the last year of the infringement. Intel had argued that it was disproportionate, but the General Court ruled otherwise, noting that the fine is at the lower end of what is allowable in law. €1.06 billion was equivalent to 4.15 percent of Intel’s annual turnover, well below the 10 percent of turnover that the Commission could have imposed.
As with other cases brought by the European Commission against U.S. digital giants, the issue of jurisdiction was clarified by the court. The General Court said that EU jurisdiction “can be established on the basis of both the implementation and the effects of the anti-competitive conduct in the European Union.”
Intel now has two months in which to challenge the court’s decision on points of law by filing an appeal with the Court of Justice of the European Union.