Intel's $1.2 Billion EU Antitrust Fine For Exclusionary AMD Rebates Just Got Overturned

Intel Headquarters
The General Court of the European Union has overturned a massive antitrust fine levied by the EU against Intel back in 2009. At the time, the EU determined Intel had abused its dominant position in the market for x86 processors by offering conditional rebates to companies like Dell and Lenovo, and slapped the chip maker with a €1.06 billion fine (equivalent to around $1.45 billion back then and $1.2 billion now in US currency).

In its ruling, the appeals court determined, "The Commission’s analysis is incomplete and does not make it possible to establish to the requisite legal standard that the rebates at issue were capable of having, or likely to have, anticompetitive effects."

The appeals court agreed with Intel that fidelity rebates granted by a company in a dominant position do not automatically equate to restricting competition, and that mitigating factors and circumstances have to be considered.

Interestingly, the ruling notes that the Commission did actually look into Intel's claims at the time, but still concluded that its practices were anticompetitive. Those practices included offering rebates to Dell, Lenovo, HP, and NEC to discourage buying and offering chips from AMD, and awarding payments to a European retailer (Media-Saturn-Holding) to exclusively sell PCs with Intel CPUs inside.

"[According to the Commission...]Those rebates and payments (‘the rebates at issue’) ensured the loyalty of the four OEMs and MSH and thereby significantly diminished the ability of competitors to compete on the merits of their own x86 processors. According to the Commission, Intel’s anticompetitive conduct thereby resulted in a reduction of consumer choice and in lower incentives to innovate," the appeals court wrote.

Also interesting is that the General Court had looked into this matter once before. Back in 2014 it actually upheld the Commission's original determination, but then in 2017, the EU Court of Justice (equivalent to the US Supreme Court) ordered the General Court to reexamine Intel's appeal.

In doing so, the General Court completely annulled (PDF) the Commission's 2009 decision. This is obviously a big win for Intel, and a bad look for the Commission, which has been known to hand out hefty fines to big firms. It's worth noting, however, that the present Competition Commissioner Margrethe Vestager and her team were not the ones that levied the original fine—that was done by two predecessors ago. Nevertheless, Vestager said a statement, "The Commission will carefully study the judgement and reflect on possible next steps."