Intel loyalty ruling ‘good news for consumers’

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Sep 07, 2017
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The EU General Court must now reassess the the effect of Intel rebates on the market

Tyrone Siu/Reuters

EU competition officials took a knock yesterday when the bloc's senior judges told Europe's lower court to reassess a ruling on loyalty rebates from large technology companies.

Lawyers said the ruling from the EU's Court of Justice was a defeat for the EU commission in its long running action against Intel, the US technology giant, and a decision that was likely to be "good news for consumers".

The ruling was particularly encouraging for other big companies facing competition investigations, said Assimakis Komninos, a partner at the US law firm White & Case's Brussels office. 

He said that while the Intel case turned on a point regarding technology sector rebates or discounts conditional on customers obtaining all or most of their requirements from the dominant company, other large corporations in the commission's competition crosshairs would take comfort. 

"The ECJ's decision is good news for consumers because dominant companies may now have more flexibility in offering rebates to high-volume buyers, ultimately leading to cheaper products for consumers," Komninos said. 

As a result of the ruling, the EU's General Court must reassess the commission's reasoning in its view of the effect of Intel rebates on the market. 

Jay Modrall, a Brussels-based partner at the transatlantic law firm Norton Rose Fulbright, pointed out that the commission had assessed the effect of Intel's conduct, "but the General Court found that it was not required to analyse Intel's claim that the commission's analysis was flawed". 

As a result of the ECJ ruling, "the General Court will have to assess the commission's effects analysis in light of Intel's criticism. While the judgment does not bring an end to this long-running case, it will be welcomed by practitioners advocating a more effects-based approach to dominance cases in the EU, as well as by Intel itself," Modrall said. 

José Rivas, a partner at the City of London law firm Bird & Bird, agreed that legal wrangling over the Intel case was "far from over". He said: "The Court of Justice has clarified its own case-law to the effect that when a dominant company applies loyalty rebates, the burden is upon it to prove that its conduct was not capable of foreclosing its competitors.

"According to the Court of Justice, the General Court erred in concluding that it is superfluous analysing such allegations by the dominant company because loyalty rebates are abusive by their very nature."

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