According to the authors of this short pirce – which can be found here – the Intel judgment addresses three main issues: (i) the role that economic analysis – and the as-efficient-competitor test – should play in the context of abuses of dominant position in general, and loyalty rebates in particular; (ii) the jurisdiction of the European Commission and international comity; and (iii) procedural fairness and the rights of the defence.
Looking at each in turn:
- The As-Efficient-Competitor (AEC) Test – This part of the paper describes the facts of the case and outlines the Court’s reasoning. For the authors, the main doubt concerning this judgment is: ‘whether the Court has willingly or unwillingly opened the door to an obligation to drive thorough economic analysis in all abuse-related cases without exception’.
The Commission decided – and the General Court agreed – that Intel’s rebates were by their very nature capable of restricting competition. This was based on the EU Courts’ case law, which has for decades built on a quasi per se rule of illegality of loyalty rebates set out in Hoffman-La Roche. Despite such a rule, the Commission nonetheless devoted 575 paragraphs to a very detailed analysis of AEC test.
As we saw above, the Court of Justice held that the General Court had erred in not reviewing the Commission’s analysis of the AEC test. What the Court of Justice meant to say, however, is unclear.
The authors identify two possibilities, with very different implications. One possible reading is that the Court merely identified a procedural flaw in the General Court’s reasoning when it refused to address Intel’s arguments concerning the application of the AEC test by the Commission. In this case, the judgment means that any serious claim by a dominant firm that its pricing strategy was not capable of restricting competition should be examined by the courts, in order to avoid breaching the firm’s rights of defence. This would have no impact on the Commission’s burden of proof, or on the substantive rules applicable to exclusivity rebates.
The other possible interpretation is that the Court purposely meant to clarify previous case law in the sense that there is no such a thing as a per se abusive conduct. This would imply a move away from a quasi per se rule to a rebuttable presumption of illegality. Should this be the intention of the Court of Justice, the Commission would be required to carry out an AEC test as a substantive element of the assessment of whether a conduct by a dominant undertaking is abusive. Such an assessment would then be subject to review by the General Court, just as any other ground of appeal.
- Extraterritorial Jurisdiction – The dispute around the jurisdiction of the Commission arose in relation to the agreements concluded between Intel and Lenovo (a Chinese company). Intel did not sell products to Lenovo in the EU internal market.
The General Court held that the jurisdiction of the Commission may be established on the basis of either the implementation test (the Commission will have jurisdiction over anticompetitive practices that are implemented in the European Union), or the qualified effects test (the Commission can apply European Union law when it is foreseeable that the conduct will have an immediate and substantial effect in the European Union). This latter test had not yet been endorsed by the Court of Justice, even though it had been previously adopted by the General Court.
Intel is therefore relevant because the Court of Justice formally endorsed the qualified effects test. The Court also provided guidance on how to apply this test. In particular, the Court requires: (i) that a practice must have a probable effect on competition in order for it to be foreseeable that such practice will have an immediate and substantial impact on the EU, and (ii) that the conduct must be considered as a whole.
The authors also argue that the EU should be careful not to encroach on other countries’ jurisdiction, in order to avoid assuming a de facto global jurisdiction.
- Procedural Fairness – The last point addressed by the authors concerns procedural fairness. I did not address this above, because it relates to a truly procedural point (i.e. whether the Commission, by having only prepared an internal note after taking a statement from a Dell executive which it later provided to Intel in non-confidential form, infringed Intel’s rights of defence). The Court of Justice found that this was a breach of the rights of defence of Intel, but not one susceptible of leading to the annulment of the decision. The authors don’t really engage with the legal implications of this, but focus on the practical ones instead – e.g. it may have some ‘practical side-effects concerning the behavior of the Commission vis-à-vis interviews and meetings, especially in the context of infringement procedure’ or ‘lead to an increase in the number of requests for testimony before the General Court of witnesses or other individuals interviewed by the Commission’. I don’t think this is not an important matter, but I think it is of limited interested for the purposes for which I prepare these emails.
Comment: This is a short paper, which will be of interest mainly for those who want to understand the case but do not want to read all decisions and judgments.