In Case T‑286/09

1Intel Corporation, Inc., (‘the applicant’ or ‘Intel’) is a company established under United States law which designs, develops, manufactures and markets central processing units (‘CPUs’), chipsets and other semiconductor components, as well as platform solutions for data processing and communications devices.

2At the end of 2008, Intel employed around 94100 people worldwide. In 2007, Intel had net revenues of 38334 million United States dollars (USD) and a net income of USD6976 million. In 2008, Intel had net revenues of USD37586 million and a net income of USD5292 million.

Administrative procedure

3On 18October 2000, Advanced Micro Devices, Inc. (‘AMD’) filed a formal complaint with the Commission of the European Communities under Article3 of Council Regulation (EEC) No17 of 6February 1962, First Regulation implementing Articles [101] and [102 TFEU] (OJ, English Special Edition, 1959-1962 (I), p.87), which it further supplemented by putting forward new facts and allegations, in the context of a supplementary complaint of 26November 2003.

4In May 2004, the Commission launched a series of investigations relating to elements in AMD’s supplementary complaint. Within the framework of that investigation, in July 2005, the Commission, assisted by several national competition authorities, carried out on-the-spot inspections pursuant to Article20(4) of Council Regulation (EC) No1/2003 of 16December 2002 on the implementation of the rules on competition laid down in Articles [101] and [102 TFEU] (OJ 2003 L1, p.1) at four Intel locations in Germany, Spain, Italy and the United Kingdom, as well as at the locations of several Intel customers in Germany, Spain, France, Italy and the United Kingdom.

5On 17July 2006, AMD filed a complaint with the Bundeskartellamt (Federal Cartel Office, Germany), in which it claimed that Intel had engaged in, inter alia, exclusionary marketing arrangements with Media-Saturn-Holding GmbH (‘MSH’), a European retailer of microelectronic devices and the largest desktop computer distributor in Europe. The Federal Cartel Office exchanged information with the Commission on that subject, pursuant to Article12 of Regulation No1/2003.

6On 23August 2006, the Commission held a meeting with D1 [confidential],(1) a customer of Intel. The Commission did not place the indicative list of topics for that meeting in the case file and did not take minutes of it. A member of the team responsible for the file at the Commission drafted a note concerning that meeting, which was described as internal by the Commission. On 19December 2008, the Commission provided the applicant with a non-confidential version of that note.

7On 26July 2007, the Commission notified to the applicant a statement of objections (‘the Statement of Objections of 2007’) concerning its conduct vis-à-vis five major original equipment manufacturers (‘OEMs’), namely Dell, Hewlett-Packard Company (HP), Acer Inc., NEC Corp. and International Business Machines Corp. (IBM). Intel replied to that statement of objections on 7January 2008 and an oral hearing was held on 11 and 12March 2008. Intel was granted access to the file on three occasions, namely on 31July 2007, 23July and 19December 2008.

8The Commission undertook several investigative measures relating to AMD’s allegations, including on-the-spot inspections at the sites of several computer retailers and Intel locations in February 2008. In addition, it addressed several written requests for information, pursuant to Article18 of Regulation No1/2003, to a number of major OEMs.

9On 17July 2008, the Commission issued to the applicant a supplementary statement of objections concerning its conduct vis-à-vis MSH. That statement of objections (‘the Supplementary Statement of Objections of 2008’) also covered Intel’s conduct vis-à-vis Lenovo Group Ltd (‘Lenovo’) and included new evidence relating to Intel’s conduct vis-à-vis some of the OEMs covered by the Statement of Objections of 2007, which had been obtained by the Commission following the publication of the latter.

10The Commission originally set Intel a deadline of eight weeks to submit its reply to the Supplementary Statement of Objections of 2008. On 15September 2008, that deadline was extended to 17October 2008 by the Hearing Officer.

11Intel did not reply to the Supplementary Statement of Objections of 2008 within the prescribed period. By contrast, on 10October 2008, Intel lodged an application with the General Court, registered under reference T‑457/08, requesting the Court, first, to annul two decisions of the Commission relating to the setting of the period for replying to the Supplementary Statement of Objections of 2008 and to the Commission’s refusal to obtain several categories of documents emanating from, inter alia, the file of the private litigation between Intel and AMD in the State of Delaware (United States) and, second, to extend the deadline for lodging its reply to the Supplementary Statement of Objections of 2008 in order to have a period of 30days from the day on which it obtained access to the relevant documents.

12Intel also lodged an application for interim measures, registered under reference T‑457/08R, by which it sought to obtain the suspension of the Commission’s procedure pending the judgment on its substantive application, as well as the suspension of the period set for lodging its reply to the Supplementary Statement of Objections of 2008 and, in the alternative, that it be allowed a period of 30days from the date of that judgment in order to reply to the Supplementary Statement of Objections of 2008.

13On 19December 2008, the Commission sent Intel a letter drawing its attention to a number of specific items of evidence which the Commission intended to use in a potential final decision (‘the Letter of Facts’). Intel did not reply to that letter by the deadline of 23January 2009.

14On 27January 2009, the President of the General Court dismissed the application for interim measures by order of 27January 2009, Intel v Commission (T‑457/08R, not published, EU:T:2009:18). Following that order, on 29January 2009, Intel proposed to file its reply to the Supplementary Statement of Objections of 2008 and to the Letter of Facts within 30days of the order of the President of the Court.

15On 2February 2009, the Commission informed Intel by letter that its services had decided not to grant it an extension of the deadlines for a reply to the Supplementary Statement of Objections of 2008 or to the Letter of Facts. That letter also stated that the Commission services were nevertheless willing to consider the possible relevance of belated written submissions, provided that Intel served such submissions by 5February 2009. Finally, the Commission expressed the view that it was not obliged to grant a request for a hearing lodged out of time, and that its services considered that the proper conduct of the administrative procedure did not make the preparation of an oral hearing necessary.

16On 3February 2009, Intel withdrew its action in the main proceedings in Case T‑457/08 and the case was removed from the Register by order of the President of the Fifth Chamber of the General Court of 24March 2009.

17On 5February 2009, Intel served a written submission including observations relating to the Supplementary Statement of Objections of 2008 and the Letter of Facts, which it classed as a ‘reply to the Supplementary Statement of Objections [of 2008]’ and a ‘reply to the [Letter of Facts]’.

18On 10February 2009, Intel wrote to the Hearing Officer and asked to be granted an oral hearing in relation to the Supplementary Statement of Objections of 2008. The Hearing Officer rejected that request by letter of 17February 2009.

19On 13May 2009, the Commission adopted Decision C(2009) 3726 final relating to a proceeding under Article [102 TFEU] and Article54 of the EEA Agreement (Case COMP/C‑3/37.990– Intel) (‘the contested decision’), a summary of which appears in the Official Journal of the European Union (OJ 2009 C227, p.13).

The contested decision

20According to the contested decision, Intel committed a single and continuous infringement of Article102 TFEU and of Article54 of the Agreement on the European Economic Area (EEA), from October 2002 until December 2007, by implementing a strategy aimed at foreclosing a competitor, AMD, from the market for x86 CPU microprocessors (‘x86 CPUs’).

Relevant market

21The goods at issue in the contested decision are CPUs, which are key components of any computer, both in terms of overall performance and cost of the system. CPUs are often referred to as a computer’s ‘brain’. The process for the manufacture of CPUs requires expensive high-tech facilities.

22CPUs used in computers can be subdivided into two categories, namely x86 CPUs and CPUs based on another architecture. The x86 architecture is a standard designed by Intel for its CPUs. It can run both the Windows and Linux operating systems. Windows is primarily linked to the instruction set corresponding to the x86 architecture. Prior to 2000, a number of manufacturers of x86 CPUs were present on the market. However, most of those manufacturers have since exited the market. The contested decision states that, since then, Intel and AMD have been essentially the only two companies still manufacturing x86 CPUs.

23The Commission’s inquiry led to the conclusion that the relevant product market was not wider than the market of x86 CPUs. The contested decision leaves open the question of whether there is a single x86 CPU market for all computers or whether it is necessary to draw a distinction between three x86 CPU markets, namely the market for desktop computers, the market for notebook computers and the market for servers. According to the contested decision, given Intel’s market shares for each segment, there is no difference to the conclusion on dominance.

24The geographical market was defined as worldwide.

Dominance

25In the contested decision, the Commission finds that, in the 10-year period which was examined (1997 to 2007), Intel consistently held market shares in excess of or around 70%. Furthermore, according to the contested decision, there are significant barriers to entry and expansion in the x86 CPU market. Those barriers arise from sunk investments in research and development, intellectual property and the production facilities which are necessary to produce x86 CPUs. In consequence, all of Intel’s competitors, except AMD, have exited the market or are left with an insignificant share.

26On the basis of Intel’s market shares and the barriers to entry and expansion in the relevant market, the contested decision concludes that, at least in the period covered by that decision, that is to say, from October 2002 to December 2007, Intel held a dominant position in that market.

Abuse and fine

27The contested decision describes two types of Intel conduct vis-à-vis its trading partners, namely conditional rebates and naked restrictions.

28First, according to the contested decision, Intel granted to four OEMs, namely Dell, Lenovo, HP and NEC, rebates which were conditional on those OEMs purchasing all or almost all of their x86 CPUs from Intel. Similarly, Intel awarded payments to MSH which were conditional on MSH selling exclusively computers containing Intel’s x86 CPUs.

29The contested decision concludes that the conditional rebates granted by Intel constitute fidelity rebates. With regard to Intel’s conditional payments to MSH, the contested decision establishes that the economic mechanism of those payments is equivalent to that of the conditional rebates granted to the OEMs.

30The contested decision also conducts an economic analysis of the capability of the rebates to foreclose a hypothetical competitor as efficient as Intel (as-efficient-competitor test; ‘the AEC test’), albeit not dominant. More precisely, the analysis establishes at what price a competitor as efficient as Intel would have had to offer CPUs in order to compensate an OEM for the loss of an Intel rebate. The same kind of analysis was conducted for the Intel payments to MSH.

31The evidence gathered by the Commission led it to conclude that Intel’s conditional rebates and payments induced the loyalty of the key OEMs and of MSH. The effects of these practices were complementary, in that they significantly diminished competitors’ ability to compete on the merits of their x86 CPUs. Intel’s anticompetitive conduct thereby resulted in a reduction of consumer choice and in lower incentives to innovate.

32Second, with regard to naked restrictions, the Commission states that Intel awarded three OEMs, namely HP, Acer and Lenovo, payments which were conditional on those OEMs postponing or cancelling the launch of products with AMD x86 CPUs or placing restrictions on the distribution of those products. The contested decision concludes that Intel’s conduct also directly harmed competition, and did not constitute normal competition on the merits.

33The Commission concludes in the contested decision that, in each instance, Intel’s conduct vis-à-vis the OEMs mentioned above and MSH constitutes an abuse under Article102 TFEU, but that each of those individual abuses is also part of a single strategy aimed at foreclosing AMD, Intel’s only significant competitor, from the market for x86 CPUs. Those individual abuses, it found, are therefore part of a single infringement of Article102 TFEU.

34By applying the Guidelines on the method of setting fines imposed pursuant to Article23(2)(a) of Regulation No1/2003 (OJ 2006 C210, p.2), the Commission imposed on the applicant a fine of EUR1.06 billion.

Operative Part

35The operative part of the contested decision reads as follows:

‘Article1

Intel… has committed a single and continuous infringement of Article [102 TFEU] and Article54 of the EEA Agreement from October 2002 until December 2007 by implementing a strategy aimed at foreclosing competitors from the market of x86 CPUs which consisted of the following elements:

(a)Granting rebates to Dell between December 2002 and December 2005 at a level that was conditional on Dell obtaining all of its x86 CPU supplies from Intel;

(b)Granting rebates to HP between November 2002 and May 2005 at a level that was conditional on HP obtaining at least 95% of its corporate desktop x86 CPU supplies from Intel;

(c)Granting rebates to NEC between October 2002 and November 2005 at a level that was conditional on NEC obtaining at least 80% of its client PC x86 CPU supplies from Intel;

(d)Granting rebates to Lenovo between January 2007 and December 2007 at a level that was conditional on Lenovo obtaining all of its notebook x86 CPU supplies from Intel;

(e)Granting payments to [MSH] between October 2002 and December 2007 at a level that was conditional on [MSH] selling only computers incorporating Intel x86 CPUs;

(f)Granting payments to HP between November 2002 and May 2005 conditional on: (i) HP directing HP’s AMD-based x86 CPU business desktops to Small and Medium Business and Government, and Educational and Medical customers rather than to enterprise business customers; (ii) precluding HP’s channel partners from stocking HP’s AMD-based x86 CPU business desktops such that such desktops would only be available to customers by ordering them from HP (either directly or via HP channel partners acting as sales agent); and (iii) HP delaying the launch of its AMD-based x86 CPU business desktop in the [Europe, Middle East and Africa] region by six months;

(g)Granting payments to Acer between September 2003 and January 2004 conditional on Acer delaying an AMD-based x86 CPU notebook;

(h)Granting payments to Lenovo between June 2006 and December 2006 conditional on Lenovo delaying and finally cancelling its AMD-based x86 CPU notebooks.

Article2

For the infringement referred to in Article1, a fine of EUR1060000000 is imposed on Intel…

Article3

Intel… shall immediately bring to an end the infringement referred to in Article1 in so far as it has not already done so.

Intel… shall refrain from repeating any act or conduct described in Article1, and from any act or conduct having the same or equivalent object or effect.

…’