Business World

Sunday 18 February 2018

Intel's long-running fight against €1bn fine could put EU's winning streak in jeopardy

A worker arranges an Intel logo at last year’s CeBIT computer and software fair in Hannover, Germany. Photo: Reuters
A worker arranges an Intel logo at last year’s CeBIT computer and software fair in Hannover, Germany. Photo: Reuters

Stephanie Bodoni

Intel's eight-year clash with the European Union over chip pricing has dragged on so long that the €1.06bn antitrust fine imposed in 2009, a record at the time, now seems like a distant memory.

But last Wednesday's ruling in the case at the EU Court of Justice could be a blast from the past if it ends the European Commission's decades-long winning streak in cases about monopolies.

Victory for Intel would encourage others "to switch to a fighter mode" said Georg Berrisch, a lawyer for Baker Botts in Brussels. Rather than agree to settle cases with the EU's antitrust enforcers, they would be more likely to head to court to appeal any fines, he said.

The Brussels-based commission has not lost a big antitrust case in court in more than 20 years. Knowing that and facing likely defeat, most companies being probed for monopoly abuse tend to cave in. They agree to a binding deal to change their behaviour, shutting down the EU investigation early to avoid fines or get a reduced penalty.

"This may be the case to disturb that trend," said Pat Treacy, a competition lawyer specialising in intellectual property and technology at Bristows in London.

Qualcomm could be the most directly affected by the ruling. The EU is probing whether the company unfairly paid Apple to only use Qualcomm chipsets in its products. Google, under investigation for inducing phone makers to use its Android software, will also be watching closely.

Intel continued its battle against the commission's 2009 penalty for using discounts to push out Advanced Micro Devices, and a decision by the EU's second highest court to back the regulator. Giving hope to the chipmaker, Nils Wahl, an adviser at the bloc's top tribunal, in October said the earlier ruling mistakenly dismissed the need for regulators to prove that Intel's payments to manufacturers - or rebates - for buying its chips were illegal.

Intel is one of the longest-running cases in the commission's history and one of the few to reach the EU's top court. It's been closely watched "because it deals with one of the most common and commercially relevant issues, rebates" and deals with "one of the current hot-topics in competition law" about the level of proof needed with infringements, said Ms Treacy.

The EU's investigation found that Intel impeded competition by giving rebates to computer makers from 2002 until 2005 on the condition that they buy at least 95pc of chips for PCs from Intel. Its antitrust fine was the EU's biggest at the time. The record stood until June, when the EU slapped Google with a €2.4bn penalty for skewing results to thwart smaller shopping search services.

Lawyers are hoping that the EU court will deliver clarity on issues raised by Intel. The advocate general did exactly this, chiding the lower court over its analysis on rebates, but also on procedural questions where Mr Wahl was critical of the EU's handling of evidence it gathered against Intel.

In October, Mr Wahl seemed to back Intel's arguments that its rights to a defence in court were harmed when the EU failed to note details of a meeting with a Dell executive to gather evidence. The lower court was mistaken to say the EU did nothing wrong and that any problems were remedied by providing the information later on, he said.

A ruling on this point could embolden pending court challenges by Apple and Ireland in which they argue that they were unfairly kept in the dark on the process of an EU state aid probe into their tax affairs.

Whether an Intel victory ends up emboldening companies to take on a long court appeal in the end comes down to money and stamina.

Bloomberg

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