Advocate General says no ‘super category’ of rebates in Intel chips case

Advocate General says no ‘super category’ of rebates in Intel chips case

Advocate General Wahl has handed down a masterful opinion in an appeal against the ruling of the General Court dismissing the European Commission’s fining decision of 2009 against Intel for abuse of dominance.  The Advocate General recommends that the Court of Justice should set aside the EUR1.06 billion record fine and refer the case back to the General Court.

The General Court had upheld the Commission’s decision ruling that exclusively rebates granted by a dominant company are, by their very nature, capable of restricting competition and foreclosing competitors from the market.

The Advocate General considers that the General Court erred in law by finding that exclusivity rebates constitute a unique category of rebates that do not require a consideration of all the circumstances of the case in order to establish an infringement of Article 102 TFEU.  He also considered that the General Court was wrong to find that the payments offered by Intel to Dell, HP, NEC and Lenovo in all likelihood had an anti-competitive effect. He considers that the General Court wrongly asked whether the conduct was ‘capable’ of restricting competition, when the correct test is whether there was a ‘likelihood’ of a foreclosing effect.

The Advocate General is also critical of the General Court’s application of the concept of a ‘single and continuous infringement’ in abuse cases.  The Advocate General concludes that the General Court erred in considering that because the Commission found an infringement for the period 2002-2007 it could base a finding of infringement for the period 2006-2007 on there being sufficient market coverage across the entire 2002-2007 period.

The opinion is a categorical rejection of the General Court’s analysis, although the Advocate General did recommend that the Court should reject Intel’s claim that the fine was disproportionate.  The Advocate General instead said that the General Court should assess what fine, if any, may be proportionate.

In my view, the Advocate General’s opinion is one of the most significant and well-reasoned opinion’s in EU competition law in recent years.  It is a refreshing approach to the difficult question of the compatibility of rebates with Article 102, while being firmly anchored in the case law.  Rather than giving lip service to an economic approach, he addresses relevant precedents in a sophisticated way that should not be easily dismissed.

Although Advocate General’s opinions are not binding on the Court they tend to be followed in over 90 per cent of cases.  Given the rigour of this opinion, which reviews the case law since Hoffmann-La Roche, it will be difficult for the Court to reject it in its entirety.  For now at least, it may be expected to prompt some rationalisation in the Commission’s pursuit of rebate and pricing cases.

Source: Opinion of Advocate General Wahl, 20 October 2016