Intel Corporation`s European Union Antitrust Case |
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Intel’s closest competitor in the processors market was AMD. Though Intel hugely dominated the PC and server market for microprocessors, AMD surpassed Intel’s sales of microprocessors in Germany, Europe’s biggest market for PCs, for the first time in August 2017. In March 2017, Intel’s microprocessors totaled 72.4 percent of the sales. On March 2, 2017, AMD launched Ryzen processors for consumer PCs and captured 27.6 percent of the market for the month of March 2017. AMD’s sales began rising after that, hitting 56.1 percent in August 2017 to overtake Intel for the first time in one decade (See Exhibit II for monthly revenue of AMD vs Intel in Germany). . |
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| While Intel attributed its dominance in the microprocessors market to its innovations and advertising campaigns, its rival AMD believed that Intel’s market dominance was due to its anticompetitive behavior. In 2001, AMD filed a complaint with the EC stating that Intel used unfair business practices to persuade computer manufacturers to buy its microprocessors and had violated the EU’s competition rules (See Exhibit IV for EU’s competition policy). AMD complained that Intel was offering conditional rebates to Original Equipment Manufacturers (OEMs) that required them to stock PCs with only Intel’s microprocessors (See Exhibit V for chronology of events in the Intel – EU antitrust case). Consequently, the EC began its investigations into Intel’s business practices.. |
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| In June 2004, the EC reopened the probe after AMD offered new information alleging that Intel offered illegal rebates to computer manufacturers. Thus, in July 2005, the EC raided Intel’s European offices in Munich, Germany, and Swindon, England, to look for evidence of anti-competitive actions. The EC also sought help from the UK’s Office of Fair Trading for on-site inspections of Intel’s offices located in Swindon. The FTCs in Japan and South Korea also investigated Intel’s business practices.. |
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| Continuing its probe against Intel, the EC raided the company’s offices in Germany. In addition to this, it also raided the offices of PC retailers such as Media Markt , DSG International , and PPR since they stocked PCs with Intel’s microprocessors.. |
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| In August 2008, Intel wrote a letter to the Directorate General for Competition (DG-COMP) requesting it to ask AMD to produce documents to substantiate its allegations of anti-competitive business practices against Intel. It said that the charges levied against it in the SSO were due to documents provided by AMD against Intel’s business practices.. |
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| On May 13, 2009, the EC concluded that Intel had “violated EU competition rules by exploiting its dominant position with a deliberate strategy to shut out AMD.” (See Exhibit VII for conclusions from EC’s investigation). After consulting with 27 EU governments, the EC levied a fine of € 1.06 billion, the highest ever in the history of the EU, on Intel. Intel had to pay the fine within 90 days.. |
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| After the EC slapped the € 1.06 billion fine on Intel, the company appealed to the General Court, which specifically dealt with complaints against other EU institutions, on the basis that the fine was excessive and should be reduced or annulled. The General Court categorized the rebates into three categories for assessing whether Intel’s rebates infringed competition law. First, quantity rebates, linked to volume of purchase, were permissible as they did not foreclose the market to competitors. . |
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| After the EC slapped the € 1.06 billion fine on Intel, the company appealed to the General Court, which specifically dealt with complaints against other EU institutions, on the basis that the fine was excessive and should be reduced or annulled. The General Court categorized the rebates into three categories for assessing whether Intel’s rebates infringed competition law. First, quantity rebates, linked to volume of purchase, were permissible as they did not foreclose the market to competitors. Second, exclusitivity rebates, . |
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| In 2014, Intel took the case to the CJEU appealing the legal characterization of exclusitivity rebates by the General Court. The company also requested the CJEU to set aside the judgment of the General Court, annul the decision at issue partially or wholly, and cancel or substantially reduce the fine imposed. The company also requested the CJEU to refer the case back to the General Court for determination in accordance with the judgment of the CJEU and order the EC to pay the costs of these proceedings before the General Court... |
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| The CJEU’s rejection of the 2014 General Court’s decision did not imply that the EC’s original 2009 decision to fine Intel would be overturned. However, analysts felt that Intel had gained yet another reprieve as far as paying the penalty was concerned for several more years considering the speed at which the case had progressed... |
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Exhibit I:Intel’s Financials
Exhibit II: Monthly Revenue of AMD Vs Intel in Germany (March to August 2017)
Exhibit III: Market Share of Intel Vs. AMD (For Q1 2004 - 2018)
Exhibit IV: EU’s Competition Policy
Exhibit V: Chronology of Events in the Intel – EU Antitrust Case
Exhibit VI: Intel’s Allegedly Abusive Marketing Practices between 2002 and 2007
Exhibit VII: Conclusions from EC’s Investigation
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