EU Court of Justice on Intel case: Loyalty rebates are not per se abusive

Today (September 6, 2017) the Court of Justice of the European Union ("CoJ EU") has set aside the entire General Court judgment in the Intel case. The judgment was long-awaited for. The CoJ EU was expected to shed more light on the question as to if and when loyalty rebates form an abuse of dominant position. Now, the case is referred back to the General Court. It has to examine whether the rebates applied by Intel were capable of restricting competition. This means that the saga has not ended and debate on loyalty rebates continues.

In 2009, the European Commission had imposed a fine of € 1.06 billion on Intel for abuse of its dominant position. In 2014, the General Court had upheld the Commission's decision. Last year, the Advocate-General ("AG") sided with Intel and advised the CoJ EU to set aside the General Court judgment. The CoJ EU has followed that opinion.

Loyalty rebates are not per se abusive

The AG had criticised the General Court for creating a super category of rebates, so-called 'exclusivity rebates' offered by a dominant undertaking, for which consideration of all circumstances of a case was not required. Invoking justifications would no longer be possible. Additionally, the AG criticized the General Court for ignoring the relevance of the 'as-efficient-competitor test' that the Commission (also) applied in order to prove that Intel had abused its dominant position.

The CoJ EU agreed both with the AG and Intel's most important arguments. The CoJ EU emphasised that the EU prohibition of abuse of dominant position does not seek to ensure that competitors less efficient than the undertaking with the dominant position should remain on the market. Even a rebate that is conditional on a customer obtaining all or most of its requirements from a dominant undertaking may not be capable of restricting competition. According to the CoJ EU, the Commission has to balance the favourable and unfavourable effects of certain behaviour. This balancing test can only be carried out after an analysis of the intrinsic capacity of that behaviour to foreclose competitors which are at least as efficient as the dominant undertaking (the above-mentioned 'as-efficient-competitor test'). If the Commission applies such a test – and the fined undertaking brings arguments against it – the General Court has to examine the arguments.

The CoJ EU decided upon the case in a Grand Chamber judgment. A Grand Chamber, in this case consisting of 15 EU judges, only appears in exceptional cases.

Saga continues

Now that the case is referred back to the General Court, it has to review whether Intel's rebates were capable of restricting competition and examine factual and economic evidence. Accordingly, it may take another few years before the case reaches the CoJ EU again. In the meantime, debate on the abusive nature of loyalty rebates will continue.