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ECJ Intel judgment - Sophie Lawrance comments on PaRR

07/09/2017

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This article was first published in PaRR, September 2017

Sophie Lawrance comments on the CJEU's Intel judgment in PaRR. 

A landmark judgment from the EU’s top court in the Intel abuse of dominance case today (6 September) will provide relief to dominant companies offering rebates while forcing Europe’s antitrust watchdog to prove their anticompetitive effects, lawyers told PaRR.

A grand chamber of 15 judges of the European Court of Justice (ECJ) today sent Intel’s appeal against a 2009 European Commission (EC) abuse of dominance decision that fined the company EUR 1.06bn back to the General Court (GC). The ECJ asked the lower court to assess whether the company’s rebates were capable of restricting competition.

In the ruling, the ECJ judges set aside the GC judgment and instructed the lower court to re-examine Intel’s arguments concerning the “as-efficient competitor” (AEC) test applied by the EC in the infringement decision.

“This judgment is the first in many years to require the Commission to think again about abuse of dominance,” Maurits Dolmans, London-based partner at Cleary Gottlieb told PaRR.

The ECJ confirms previous case law, he noted, referring to the case Hoffmann-La Roche, in which it condemned exclusivity rebates as abusive by nature.

At the same time, Dolmans said, the ECJ clarified that a defendant arguing before the EC on the basis of supporting evidence that its conduct could not restrict competition from equally efficient rivals, must see those arguments rebutted by the agency. The EC had done that, but the GC should have reviewed the EC’s analysis, he added.

Dolmans described the decision as landmark and said the judgment is “balanced” and “reflects common sense”, he said.

Sophie Lawrance, London-based partner at Bristows, concurred. She noted that it was quite unusual for the ECJ to effectively say that the GC did not do its job properly and that it has failed to look at some issues.

While the judgment is not a “big upset” for the EC, “it has certainly given some support to any company that is currently facing an investigation into exclusionary effects - not just on rebates but more broadly,” Lawrance said.

Lawrance found the court’s endorsement of the AEC test particularly striking, noting that it tended to run against the trend of the EC’s inclination to protect smaller competitors.

She added that the “judgment will help dominant companies generally and give them an objective threshold of when conduct is going to be problematic.”

She added that the judgment resets the bar quite appropriately in abuse of dominance cases involving rebates and pricing.

Kevin Coates, Brussels-based partner at Covington concurred.

“When a court says the case law needs clarifying, they are moving on a little,” he said.

Coates was referring to a section of the judgment which states that “case-law must be further clarified… where the undertaking concerned submits… on the basis of supporting evidence, that its conduct was not capable of restricting competition.”

He believes that the ECJ is “moving the dial incrementally” in favour of more economic analysis as compared to the traditional case law of the court going back 40 years.

According to Ian Giles of Norton Rose Fulbright, the ruling pressures the GC to revisit the extent to which the EC evaluated the economic context of Intel’s conduct and supports the view that the theory of harm and anticompetitive effects need to be properly articulated.

“This is therefore a welcome decision for business,” Giles said.

The EC’s approach on effects-based analysis in the original decision was “fairly cursory”, and there is a “real risk” that the GC may now find that this is not good enough and dismiss the Brussels’ agency’s decision or at least reduce the penalty.

Giles said an additional implication of today’s ruling will be that the ECJ will hold the GC and the EC to a higher standard in their decisions on other ongoing tech cases and broadly on other enforcement activities at the European as well as at the member state level.

An EC spokesperson said the agency has taken note of the ruling and will study the judgment carefully. It is now for the GC to review the EC’s original 2009 decision imposing a fine under the framework set out by the judgment, the spokesperson added.


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