In the latest development of a protracted, 16-year legal saga, U.S. chipmaker Intel lost its challenge against an EU antitrust ruling on Wednesday, but secured a significant financial reduction.
Europe’s second-highest court, the General Court, upheld the European Commission’s finding that Intel engaged in anticompetitive conduct but slashed the associated fine by nearly one-third, from the €376 million imposed in 2023 to €237,105,540 (approximately $278 million).
The decision, known as Case T-1129/23 Intel Corporation v Commission, marks a partial victory for Intel, as the new figure represents a far cry from the original €1.06 billion fine imposed by the Commission in 2009 for broader market abuse allegations, which was largely thrown out by the courts in 2022.
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The Original 2009 Case and Its Partial Annulment
The long-running dispute began when the European Commission imposed a then-record fine of €1.06 billion on Intel in 2009 for abuse of its dominant position in the x86 microprocessor market. The Commission’s original decision focused on two main areas of illegal conduct spanning from 2002 to 2007:
- Conditional Rebates (The Annulled Part): This was the largest portion of the fine, concerning exclusivity rebates granted to several major computer manufacturers, including Dell, HP, NEC, and Lenovo. These rebates were conditioned on the manufacturers buying all or almost all of their x86 CPUs from Intel.
The Commission argued that these “loyalty rebates” essentially denied rival Advanced Micro Devices (AMD.O) a chance to compete on the merits, forcing manufacturers to stick with Intel to avoid losing the rebate across their much larger volume of Intel purchases.
2. Naked Restrictions (The Upheld Part): This involved direct payments and other restrictions imposed on manufacturers and a large retailer to halt or delay the launch of specific products equipped with AMD processors. This conduct was deemed abusive because its sole object was to exclude the rival.
In a landmark victory for Intel, the General Court effectively overturned the conditional rebates portion of the 2009 fine in 2022. The court ruled that the Commission had made key errors by failing to provide a sufficiently detailed and complete economic analysis, including a proper application of the “as-efficient competitor” (AEC) test. This test requires regulators to show that a rival as efficient as the dominant firm would still be foreclosed by the pricing practice.
The Infringement: “Naked Restrictions”
The fine upheld by the court concerns a narrow, yet serious, category of anti-competitive practices known as “naked restrictions.” This term, in EU competition law, refers to restrictions on competition that have no pro-competitive purpose and whose sole objective is to restrict or exclude rivals.
Specifically, the General Court confirmed that Intel made payments to three major computer manufacturers—HP, Acer, and Lenovo—between November 2002 and December 2006. The payments were conditioned on the manufacturers agreeing to halt or delay the launch of rival products utilizing processors from Intel’s competitor, Advanced Micro Devices.
While the court upheld the Commission’s finding that the naked restrictions were an abuse of Intel’s dominant position in the x86 microprocessor market, it agreed with Intel’s argument that the scale of the original €376 million fine was disproportionate.
The judges in Luxembourg reasoned that the new figure of €237 million is a “more appropriate reflection of the gravity and duration of the infringement at issue,” based on two key mitigating factors:
- Limited Scope: The restrictions were found to have affected a relatively limited number of computer models, rather than representing a market-wide foreclosure strategy.
- Infringement Gaps: The court noted that there were 12-month gaps separating some of the anti-competitive practices, suggesting the conduct was not a continuous, uninterrupted scheme throughout the entire period.
The court rejected Intel’s other arguments, including claims that its rights of defense were infringed, maintaining that the Commission correctly relied on the practices that were not annulled in the earlier judgments.
Implications and What’s Next
This ruling is a significant victory for the European Commission’s Directorate-General for Competition, as it confirms the judicial sustainability of its 2023 decision (re-imposed after the 2009 penalty was mostly overturned). Commissioner Didier Reynders had stated in 2023 that the decision showed the Commission’s commitment to ensuring “that very serious antitrust breaches do not go unsanctioned.”
However, the 15-year saga may not yet be over. Both the European Commission and Intel have the right to appeal the General Court’s decision to the EU Court of Justice, Europe’s highest court, though appeals are limited to points of law. The final resolution of this case will continue to shape the legal standards for proving exclusionary abuse and calculating fines in future EU antitrust cases against dominant technology firms.