Intel Argues EU Antitrust Decision In 2009 Was ‘Fundamentally Flawed’

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Over a decade later the billion euro antitrust penalty levied against chip giant Intel, continues to be played out in court

Intel has told a European court this week that the European Commission antitrust decision against it was fundamentally flawed – eleven years after it was first issued.

Intel had been stung with the €1.06 billion (£972m) antitrust fine by the European Commission (EC) way back in 2009, after officials accused Intel of abusing its market position.

The officials alleged that Intel had engaged in “illegal anticompetitive practices to exclude competitors from the market for computer chips”.

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Intel penalty

Essentially, the EC based its case on complaints – in 2000, 2003 and 2006 – from rival chip-maker AMD. It said that Intel “interfered directly in the relations between computer manufacturers and AMD”.

EC officials concluded in 2009 that Intel’s alleged illegal activity took two forms.

Firstly, Intel gave rebates to computer vendors on the condition that they bought their x86 processors from the chip maker and made direct payments to one major retailer on the condition that only stocked PCs with Intel chips.

Secondly, the EC also claimed that Intel made payments to computer makers to delay the release of products using alternative x86 processors.

Now this week the US chip giant is laying out its arguments at the General Court in a re-hearing of the case, Reuters reported.

In 2017 the highest European court, the European Court of Justice (ECJ), had taken a second look at the huge antitrust fine levied against Intel.

The ECJ in 2017 disagreed with its 2014 ruling, which had backed the European Commission’s decision, in what at the time was a major setback for the EU competition watchdog.

The ECJ reportedly told the lower tribunal to re-examine the case and whether exclusivity rebates actually harmed competition.

Fundamentally flawed

And now Intel is putting its case for the defence.

The Commission’s decision was fundamentally flawed, Intel’s lawyer Daniel Beard was quoted by Reuters as telling the panel of five judges.

“The Commission either took a wrong approach in its decision or it carried out an as efficient competitor (AEC) test and it got it wrong,” he reportedly said.

An AEC test is an economic analysis that determines if a dominant company forces out competitors that are as efficient or more efficient through anti-competitive practices.

According to Reuters, the Association for Competitive Technology is supporting Intel, while French consumer body UFC is backing the Commission.

A judgement is likely to come in 2021, subject to more appeals.

Long running

The EC had issued the fine back in 2009. From the start Intel protested and in 2012 it filed an appeal against the decision, arguing that the antitrust arm of the European Union had failed to prove that the giant chip maker unlawfully hindered AMD’s abilities to do business, and that the fine – the largest ever levied by the commission (at that time) – was “manifestly disproportionate” with other fines levied by the EC.

It is worth remembering that Intel did have an ally in the EC’s ombudsman, who in November 2009 criticised the commission for improperly recording a meeting with a Dell executive during the course of its investigation. The ombudsman accused the European regulators of “maladministration.”

It is also worth remembering that AMD had settled its own legal dispute with Intel in November 2009.

Intel paid AMD $1.25 billion (£772m) and agreed to a set of business practice provisions.

But in 2014 Intel lost an appeal with the European General Court, which prompted Intel to state at the time that “we are very disappointed with the decision.”

Intel is not the only tech firm appealing European antitrust decisions.

Qualcomm is also appealing its 997-million-euro EU fine for paying Apple to use only its chips, blocking out rivals such as Intel.

And Google has also challenged a record 4.34-billion euro EU antitrust fine levied for using its Android mobile operating system to squeeze out rivals.

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Author: Tom Jowitt
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