Intel: General Court rewinds clock on rebates

By Brian Sher

The European General Court has handed down its judgment in the Intel rebates case. The court dismissed in its entirety Intel’s appeal against a finding from the European Commission in 2009 that it had abused a dominant position in the microchips market through a mixture of rebate schemes, exclusivity and other arrangements principally with its computer hardware customers. The court also upheld the €1.06bn (£853m) fine imposed — the largest ever on a single entity. But the case is of most relevance to business for the highly restrictive approach the court takes to exclusivity and loyalty rebates.

The case concerned two main types of practice: (a) discounts granted by Intel to four major computer manufacturers (Dell, Lenovo, HP and NEC) and to the retailer Media-Saturn on condition that they purchased all or most of their x86 central processing unit microchips (CPUs) from Intel (described as ‘exclusivity’ or ‘loyalty rebates’); and (b) payments that were conditional on restrictions on the distribution by the customer of computers containing the CPUs of Intel’s rival AMD, or on postponing or cancelling the launch of these products (described by the European Commission as ‘naked restrictions’).

Intel was found dominant in the worldwide CPUs market with a market share of 70 per cent or more, high barriers to entry and only one significant competitor in the form of AMD. Both types of practice were found to constitute unlawful abuse and the fine was levied…

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