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Saturday, June 22, 2024 | Back issues
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Legal Errors May Doom $1.1B EU Fine of Intel

(CN) - A European high court adviser recommended tossing a $1.16 billion antitrust fine against microchip giant Intel, adding the court that imposed the fine should take a fresh look at the case given its numerous errors in law.

In 2009, the European Commission found that Intel had abused its dominant position on the market for x86 central processing units. The regulator imposed a $1.16 billion fine and ordered Intel to stop what it called efforts to drive competitor Advanced Micro Devices from the market.

According to the commission, Intel's scheme involved giving rebates to computer manufacturers Dell, Lenovo, HP and NEC on the condition that they purchased most or all of their CPUs from Intel. The commission found that Intel's rebate made it nearly impossible for other CPU makers to compete, diminishing consumer choice and innovation.

On appeal, the European General Court called Intel's rebate scheme an "exclusivity rebate" meant to distort competition and upheld the fine in 2014.

But on Thursday, European Court of Justice adviser Nils Wahl recommended tossing the fine and handing the case back to the lower court "to examine all the circumstances of the case."

Specifically, Wahl said the general court made a mistake in finding that "exclusivity rebates constitute a separate and unique category of rebates that require no consideration of all the circumstances in order to establish an abuse of dominant position."

The lower court failed to establish that the rebates Intel offered actually had an anticompetitive effect, and made a further error by setting the time period of Intel's infringement at five years when in reality the rebates only affected the market between 2006 and 2007, Wahl said.

Furthermore, Wahl said that the commission had actually broken the law during its investigation of Intel by not recording its meeting with a Dell executive. And although the commission added a note about the meeting to its investigative file, the note contained no substantive information and deprived Intel of its right to defend, Wahl said.

The advocate general did disagree with Intel's objection that the fine was disproportionate, however.

"The fact that the fine was record-breaking at the time does not in itself make it disproportionate," Wahl wrote. "Intel has failed to point to any legal error committed by the general court which would permit the Court of Justice to assess the proportionality of the fine."

Wahl said the lower court's judgment should be set aside and the case remanded for a second look using the full set of facts.

The adviser's opinion is not binding on the high court, which has begun its own deliberations in the case.

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