The jurisprudence of the Commission and EU courts leading up to the Commission’s Intel decision in 2009 had tended to favour a form-based, over an effects-based, approach in assessing the legality of rebates where these involved requirements to commit the majority of business to the dominant supplier. Over the last 35 years, the extent to which dominant companies are entitled to offer rebates to their customers has been an ongoing area of controversy. The legality of rebates by dominant companies prior to Intel The key question for rebates, which fundamentally entail a reduction in price to customers, is whether they should be judged against the same legal standard as price-fixing cartels if they involve explicit exclusivity requirements and are provided by a dominant undertaking. The concern for many observers is that, as has also been observed in cartel case law, there may be an inclination on the part of the Commission to follow the path of least resistance in framing its cases, relying on narrow interpretations of legal precedent to avoid protracted consideration of the anticompetitive effects of the arrangements in question. However, there is a legitimate question where types of conduct ostensibly appear to have anticompetitive effects, such as obvious price-fixing cartels, as to how far an authority is required to go to prove those effects. However, in Intel’s first appeal of the Commission’s decision in 2014, the Commission’s approach was endorsed by the EU General Court (GC), which found that a dominant undertaking cannot employ rebate schemes conditional on exclusivity (or quasi-exclusivity), as these by their very nature restrict competition.įrom a competition policy perspective, it would seem uncontroversial that companies should not face sanction – and certainly not €1bn in penalties – for conduct which has no anticompetitive effect. Intel countered that the Commission’s effects analysis was flawed and that these arrangements had no anticompetitive effects.

The Intel decision was considered controversial by some as the Commission appeared to follow a form-based line of reasoning, finding anticompetitive conduct on the basis of the legal parameters of previous cases, and explicitly stating that, although it had considered the effects of the conduct in question, it did not need to rely on this to establish an infringement. The Intel case in 2009 led to the Commission imposing a fine on Intel of €1.06bn (the largest single fine imposed by a competition regulator on an individual company) in respect of rebates and other “naked restrictions” which the Commission found had been intended to exclude competition by Intel’s rival, AMD, in the manufacture of a particular type of computer microprocessor (x86 CPUs) (C(2009) 3726 decision of ). In this article, we explore (1) the legality of rebate schemes employed by dominant undertakings prior to Intel (2) the status of the law following the Commission’s Intel decision and (3) AG Wahl’s opinion, and its implications for the future. The implications for companies of such a shift would be potentially a reduction in legal certainty, but also greater confidence that procompetitive schemes would not fall foul of form-based infringement findings. If the EU Court of Justice’s (ECJ) subsequent judgment in the case follows AG Wahl’s opinion, this will necessitate a shift in enforcement policy from the Commission, and a move to a more effects-based analysis in future investigations.

The potential impact of AG Wahl’s opinion should not be understated. Likewise, excessive caution in seeking to demonstrate conclusively anticompetitive effects before any infringement finding will lead to false negatives, with anticompetitive conduct escaping punishment.Īgainst this backdrop, Advocate General Nils Wahl’s (AG Wahl) opinion on the Intel case (Case C-413/14) on 20 October 2016 sought to clarify the standard that the European Commission should be adopting in finding rebate schemes to be an abuse of dominance – and the extent to which the Commission was required to explore effects, rather than penalising on the basis of a form-based assessment. Overzealous enforcement on the basis of categories of infringement without exploring effects will lead to false positives – the penalising of arrangements which were, conversely, procompetitive.

The economic reality that certain conduct may be either beneficial or harmful to competition depending on context complicates enforcement decisions. There is an ongoing tension in competition law between the desire for legal certainty as to the categories of behaviour that will give rise to infringements, and the need to assess the impact of such behaviour in context to determine whether it has anticompetitive effects. This article was first published in Competition Law Insight on 14 February 2017.

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