In Case T‑286/09

485In recital1577 of the contested decision, in Section 4.2.4 which relates to the strategic importance of the OEMs which benefited from Intel’s rebates, the Commission stated, in essence, that, because of their market share, their strong presence in the more profitable segment of the market and their ability to legitimise a new processor in the market, some OEMs, in the present case Dell and HP, were strategically more important than others in providing x86 CPU manufacturers with access to the market. The Commission also took the view, in recital1597 of the contested decision, that the OEMs targeted by Intel’s conduct held a significant part of the market and that, moreover, they were strategically more important than other OEMs, which had had a more significant impact on the overall market than would have corresponded to their aggregate market share alone. The Commission concluded that the coverage of the abusive practices had to be regarded as significant.

486The applicant and ACT submit, in essence, that, by simply stating in recital1597 of the contested decision that the OEMs targeted by Intel’s conduct held a significant part of the market and that they were strategically the most important, which had a more significant impact on the overall market than would have corresponded to their aggregate market share alone, the contested decision did not properly take account of the criterion of the coverage rate for the purpose of analysing whether Intel’s rebates and payments were capable of leading to foreclosure.

487Furthermore, the applicant states that that finding in the contested decision was set out following the conclusion, in recital1001 of that decision, that Intel’s rebates and payments fulfilled the criteria to be regarded as abusive, whereas the judgment on the appeal requires that the Commission analyse the market coverage before making a finding of abuse. In addition, the applicant and ACT argue that the evidence relied on by the Commission was not sufficient for the view to be taken that the market share covered by Intel’s conduct was significant.

488The Commission disputes the substance of the arguments put forward by the applicant.

489First, the Commission observes that market coverage was considered in Section4.2.4, of the contested decision, in the context of the strategic importance of the OEMs which received rebates from Intel. The Commission dwells in particular on the fact that, although paragraph139 of the judgment on the appeal simply identifies market coverage as a factor, this must be applied in the context of each case and, in the present case, the strategic importance of the part of the market covered is to be taken into consideration in assessing that factor as demonstrating the capability of Intel’s loyalty rebates to foreclose competition. Similarly, it is necessary to take account of the fact that Intel was an unavoidable trading partner for the OEMs, which gave Intel significant leverage over its customers, since it would have been unrealistic for them to switch to an all AMD or majority AMD product line-up.

490Second, the Commission maintains that, as regards the share of the market covered, the applicant no longer relies on the assertion, set out in paragraph115 of the application, that the market coverage of Intel’s practices did not exceed 2% in any year, but appears to accept the fact that the Court found, in paragraph194 of the initial judgment, that market coverage was approximately 14% on average during the period in which the infringement was committed and submits that it could be inferred from certain evidence that the market shares of the OEMs concerned by the rebates at issue exceeded 25%.

491Third, as regards the complaint raised by Intel in its observations that the finding in recital1597 of the contested decision was set out after the conclusion had been reached, in recital1001 of that decision, that those rebates and payments fulfilled the criteria to be regarded as abusive (see paragraph487 above), the Commission takes the view that the applicant mischaracterises the contested decision. Recital1001 of that decision relies on the judgment of 13February 1979, Hoffmann-La Roche v Commission (85/76, EU:C:1979:36), according to which loyalty rebates infringe Article102 TFEU. However, as set out in recital1597 of the contested decision, the Commission states that the subsequent analysis shows that targeting such strategically important OEMs has a more significant impact on the overall market than would correspond to their aggregate market share alone. Consequently, the coverage of the abusive practices has to be regarded as ‘significant’ and recital1616 of the contested decision reaches the overall conclusion that the loyalty induced by the rebates had complementary effects which significantly diminished the ability of other competitors to compete and sell their products on the merits of their x86 CPUs.

492It should be recalled that it is apparent from paragraph139 of the judgment on the appeal that the share of the market covered by the contested practice is one of the criteria which the Commission must take into account for the purposes of assessing the foreclosure capability of rebates and conditional payments (see paragraphs119 and 125 above).

493In the first place, in the circumstances of the present case, it cannot be ruled out that Section 4.2.4 of the contested decision, concerning the strategic importance of the OEMs which benefited from Intel’s rebates, might be relevant in examining the coverage rate. That section deals with certain factors which are a priori relevant to examining the foreclosure capability of a system of rebates, such as targeting certain pricing practices at the most profitable segments of the market or using, to the detriment of a competitor, the largest market operators’ power to legitimise a product.

494The fact remains that, contrary to the Commission’s assertions, and regardless of whether the finding in recital1597 of the contested decision was set out after the conclusion had been reached in recital1001 of that decision that Intel’s rebates and payments fulfilled the criteria to be regarded as abusive, the content of Section4.2.4 of the contested decision, concerning the strategic importance of OEMs which benefited from Intel’s rebates, and in particular recital1597 of that decision upon which the Commission relies in order to find that the share of the market covered had been examined, cannot be interpreted as constituting in itself sufficient examination, in the circumstances of the present case, of the share of the market covered by the contested practice, within the meaning of paragraph139 of the judgment on the appeal.

495Irrespective of the fact that the Commission relied on the market shares of certain OEMs and on the assumption that the Commission could legitimately confine itself to relying on the market shares of certain OEMs rather than examining the share of the market covered by the contested practice, as mentioned in paragraph139 of the judgment on the appeal, recitals1578 to 1580 of the contested decision take account solely of Dell’s and HP’s market shares, and exclude the other OEMs concerned by the contested practice, as pointed out by the applicant and ACT. It should be added that the market shares taken into account cover only the period from the first quarter of 2003 to the final quarter of 2005. Therefore, not only does that decision cover only one part of the entire period covered by that decision, that is to say, from October 2002 to December 2007, but it also disregards the period from 2006 to 2007, during which Lenovo and MSH were concerned. Lastly, as the applicant and ACT point out, it is apparent from recitals1578 to 1580 of the contested decision that the figures for market shares relied on by the Commission take account of Dell’s and HP’s worldwide market shares in all segments, despite the fact that the sole contested practice as regards HP relates to corporate desktops, as stated in Article1(b) of the contested decision.

496In the second place, in its main observations, the Commission relies on the Court’s finding, in paragraph194 of the initial judgment, that the market coverage was approximately 14% on average during the period of the infringement and submits that it could be inferred from certain evidence that the market shares of the OEMs concerned by the rebates at issue exceeded 25%. The Commission also states that ‘Intel’s complaint… that the Commission relied on HP’s market share across all segments is unfounded; the [contested] decision does not rely on any specific figure as regards HP and the [initial] judgment’s reliance on the average coverage of 14%, contrary to Intel’s assertion… does not take account of the segment-specific loyalty rebate with HP’.

497However, it is necessary to reject the Commission’s argument based on the fact that the Court found, in paragraph194 of the initial judgment, that market coverage was approximately 14% on average during the period in which the infringement was committed, which the applicant did not dispute, or that the market shares of the OEMs concerned by the rebates exceeded 25%.

498It must be stated that the rates of 14% or 25% do not appear anywhere in the contested decision subsequent to an examination of the coverage rate. Consequently, for the purposes of reviewing the legality of the contested decision, as regards the share of the market covered by the contested practice, the Court is not in a position to place reliance on those rates, even if they are derived from evidence in the file, since they were not included in the contested decision and, by definition, the Commission could not have acted on the basis of that evidence.

499Consequently, there being no need to give a ruling on the Commission’s arguments regarding HP’s market share, it must be held that the Commission failed to determine the share of the market covered by the practice at issue, contrary to the requirement placed on it pursuant to paragraph139 of the judgment on the appeal. It should be added that that is, moreover, contrary to the Commission’s own guidelines on the analysis of cases falling within the scope of Article102 TFEU, and in particular contrary to paragraph20 of the Guidance on the Commission’s enforcement priorities in applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings (OJ 2009 C45, p.7).

500In the light of the foregoing, it must therefore be concluded that the applicant and ACT are correct in maintaining that the contested decision is vitiated by errors in that it did not consider properly the criterion relating to the share of the market covered by the contested practice.

2.Duration and amount of the rebates

501In the application and in its main observations, Intel criticises the failure to analyse, in the contested decision, the importance, first, of the duration of the conditional rebates and payments offered and, second, of the amounts of those rebates and payments. Intel maintains, in particular, that it is not possible, in order to assess the foreclosure effects of the rebates at issue on an as-efficient competitor, to accumulate short-term agreements concluded with the OEMs and MSH. In its view, in order to do so, it is necessary to take into consideration the duration of each of those agreements.

502The Commission submits that the conditions for granting the rebates and various payments granted by Intel were analysed, for each OEM, in SectionVII.4.2.2 of the contested decision. Those analyses concerned the nature and modus operandi of the exclusivity or quasi-exclusivity conditions to which the payments and rebates were subject, the amounts of the rebates and, lastly, the decisive nature of the conditionality of the payments and rebates for each of the OEMs, and for MSH, when they assessed the possibility of obtaining part of their supplies of x86 CPUs from AMD. In particular, the Commission states in the defence that the brevity of the notice of termination period for certain agreements, including those with HP, did not change the harmful effects on competition. Accordingly, if Intel had terminated the HPA agreements following contravention by HP of its quasi-exclusivity obligation, HP would have lost the rebates over the entire remaining duration of the agreement and, at least potentially, over the duration of the extension of that agreement.

503In its main observations, the Commission submits, in essence, that the applicant has not challenged the passage in the initial judgment which is relevant in the light of the judgment on the appeal, namely the findings in paragraph195 of the initial judgment, in which the Court considered the implications of the duration of the rebate agreements for their foreclosure capability. The Commission therefore submits that it is necessary to regard as definitive the findings in paragraph195 of the initial judgment, to the effect that the duration of Intel’s agreements did not impair their ability to foreclose competition.

504The Commission, in its main observations, also submits, with regard to paragraph195 of the initial judgment, that, even if Intel were permitted to renew its challenge to the contested decision by reference to the assessment of the significance of the duration of its agreements, there is no reason to depart from the conclusion reached in the initial judgment. First, according to the Commission, if, as found in the contested decision, Intel fails the AEC test, Intel’s insistence on the OEMs being able to withdraw from the loyalty rebate agreements is illogical. An as-efficient competitor simply could not compete. Second, even if Intel were to pass the AEC test, it is inherent to an as-efficient competitor’s bid for the OEMs’ business in such circumstances that it would have to accept a much lower level of profitability on those sales than Intel. Third, the Commission reiterates the allegation that the overall duration of an Intel loyalty rebate scheme would be a factor in how long an as-efficient competitor would have to accept reduced profitability in ‘capturing an OEM’s custom from Intel’ on those sales. Accordingly, for HP, any competitor wishing to displace Intel would have to be prepared to offer terms which would offset the loss of Intel’s rebates over at least the full term of the HPA1 agreement. Moreover, the Commission maintains that each set of agreements with the OEMs ran for a period sufficient for Intel’s actions to be capable of foreclosing competition, since those agreements focused on the most profitable periods for sales of x86 CPU processors, early in the life cycle of a new design. The Commission also asserts that the duration of Intel’s practices cannot be isolated from their timing, since they sought to overcome Intel’s inability to produce a timely technical response to AMD’s 64-bit x86 CPUs.

505During the 2020 hearing, the Commission submitted a document to the Court concerning the recitals of the contested decision which, in its view, evaluated the various criteria as set out in paragraph139 of the judgment on the appeal, including duration.

506In the first place, it is necessary to reject the argument raised by the Commission in its main observations that the complaints regarding the duration and amount of the conditional rebates and payments are inadmissible. It is sufficient to note that the applicant’s arguments put forward in its main and supplementary observations in that regard relate clearly to those put forward in paragraphs102 and 111 to 114 of the application. Consequently, in accordance with the case-law cited in paragraph106 above, those complaints are admissible.

507In the second place, it is apparent from paragraph139 of the judgment on the appeal that the analysis of the duration and amount of the conditional rebates and payments, which are the object of the contested practice, is one of the criteria which must be taken into account in assessing the foreclosure capability of those practices.

508First, it is true that, in the contested decision, the Commission examined, on several occasions, factors relating to the duration of the rebates.

509First of all, recitals1013 to 1035 of the contested decision concern the time horizon for the AEC test. The Commission found, in particular, in recitals1015 and 1017 of the contested decision, that, in certain circumstances, there could be quarterly adjustments to rebate practices and stated, in recitals1017 to 1028 of the contested decision, that, because of the fact that the relevant market was very fast-moving, innovation in the relevant sector made it difficult or even impossible to make long-term predictions. Similarly, recitals1025 to 1027 of the contested decision contain a reference to the duration of the contracts and to the fact that it was necessary regularly to ‘refresh’ product cycles.

510Next, recitals201 and 202 of the contested decision indicate that the Commission considered that some of the relevant negotiations between Intel and the OEMs were conducted on a quarterly basis. Those negotiations also concerned a relatively short period, which could allow an as-efficient competitor to offer its own x86 CPUs to those OEMs more easily. Similarly, in recitals965 to 968 of the contested decision, the Commission examined Intel’s argument that the 30-day termination notice provision in the HPA agreements gave HP greater freedom to compare its offers with those of AMD, and indicated that Intel’s status as an unavoidable trading partner and the effects of its rebates resulted in that argument being rejected. At the 2020 hearing, the Commission stated that, in some cases, as regards HP, there had been several renewals of the agreements with Intel on a monthly basis. As regards Dell, the Commission stated, in recital1227 of the contested decision, that, due to the absence of any written contract with Intel, as regards the rebates granted under the Meet Competition Programme, those rebates were the subject of ‘constant’ oral renegotiation, such that Intel had great flexibility to change discounts.

511The fact remains that, first, the purpose of recitals1013 to 1035 of the contested decision was solely to define the time horizon on which the OEMs based their decisions regarding their supply requirements for x86 CPUs as an assumption underlying the calculation of the contestable share of the rebates for each of the OEMs concerned. The Commission concluded that, in relation to the AEC test, it would proceed on the assumption that the relevant time horizon was one year.

512Consequently, the time horizon was used in that regard to determine the methodology for calculating an OEM’s contestable share, which then had to be compared with other factors in the AEC test in order to assess whether the rebates at issue could have a foreclosure effect. Such an examination does not therefore constitute an analysis of the duration of the rebates as a factor which is capable, in itself, of demonstrating their ability to have a foreclosure effect.

513Second, it is apparent from recitals201, 202, 965 to 968 and 1227 of the contested decision that the Commission examined the duration and form of the OEMs’ commitments to Intel giving a right to rebates as factors capable of encouraging or hindering a new competitor’s entry into the market, having regard in particular to the temporal scope of those commitments or Intel’s ability to pay or adjust its rebates within a short time frame.

514However, although those aspects of the time horizon appeared to it to be relevant, the Commission examined them only in a haphazard and limited manner, in recitals201, 202, 965 to 968 and 1227 of the contested decision. It did not carry out a thorough and exhaustive examination for all OEMs of those aspects in so far as they were capable of determining or strengthening the capability of Intel’s pricing practices at issue to have a foreclosure effect.

515It is apparent from the foregoing that the Commission did not examine the duration of the rebates as a factor intrinsically relevant to determining the capability of Intel’s pricing practices at issue to have a foreclosure effect.

516Second, the Commission asserts, in essence, that, even if the AEC test did not demonstrate the capability of the rebates at issue to have a foreclosure effect, it is the total period during which the applicant applied the rebates and exclusivity payments to OEMs which should be considered and that, in so far as the rebates lasted one year for Lenovo and several years for the other OEMs and for MSH, the conclusion must be drawn that a competitor of Intel in the x86 CPU market would have had to accept a drop in profitability and a much lower level of profitability on those sales as compared with Intel. In the Commission’s view, those considerations are apparent from paragraphs93 and 195 of the initial judgment and are therefore definitive.

517In that regard, first, it is apparent from paragraph81 above that the operative part of the judgment on the appeal sets aside the entirety of the initial judgment. Consequently, the Court must, following the referral back, carry out a fresh examination of the parties’ arguments concerning the duration of the rebates, without being bound by paragraphs93 and 195 of the initial judgment, which it does not accept for its own account.

518Second, it is apparent from paragraphs138 and 139 of the judgment on the appeal that, in the case where the undertaking concerned submits, during the administrative procedure, on the basis of supporting evidence, that its conduct was not capable of restricting competition and, in particular, was not capable of producing the alleged foreclosure effects, the Commission is required to assess all of the criteria referred to in paragraph139 of that judgment, and not solely the criterion relating to the duration of the rebates set out in that paragraph. Accordingly, the sole reference to the period during which the rebates were granted to the OEMs and MSH is not sufficient, in itself, notwithstanding the conclusions which may be drawn from the AEC test, to justify definitive conclusions as to the foreclosure effects thereby produced.

519Third, the Commission cannot succeed in its assertion that the duration of Intel’s practices cannot be isolated from their timing, since they sought to overcome Intel’s inability to produce a timely technical response to AMD’s 64-bit x86 CPUs. For the same reasons as those set out in paragraph518 above, that argument, even if it appears as such in the contested decision, is not in itself sufficient to justify definitive findings as to the foreclosure effects thereby produced.

520There being no need to rule on the applicant’s arguments concerning the amounts of the rebates, it is apparent from the foregoing that the Commission erred in failing to examine, in the contested decision, the duration of the rebates as evidence making it possible to determine the capacity of Intel’s pricing practices at issue to have a foreclosure effect.

3.Conclusions on taking account of the criteria mentioned in paragraph139 of the judgment on the appeal

521In the light of all the considerations set out in paragraphs485 to 520 above, there being no need to analyse the applicant’s complaints regarding the criteria concerning the amount of the rebates and the strategy aiming to exclude competitors from the market, it must be concluded that the applicant is justified in maintaining that the Commission’s analysis in the contested decision of the criteria mentioned in paragraph139 of the judgment on the appeal is vitiated by a number of errors. The Commission did not consider properly the criterion relating to the share of the market covered by the contested practice and did not analyse correctly the duration of the rebates.

D.Conclusion on the application for annulment of the contested decision

522It is apparent from paragraphs124 to 126 above that, although a system of rebates set up by an undertaking in a dominant position on the market may be characterised as a restriction of competition, since, given its nature, it may be presumed to have restrictive effects on competition, the fact remains that what is involved is, in that regard, a mere presumption and not a per se infringement of Article102 TFEU, which would relieve the Commission in all cases of the obligation to examine whether there were anticompetitive effects. Where an undertaking in a dominant position submits, during the administrative procedure, on the basis of supporting evidence, that its conduct was not capable of restricting competition and, in particular, was not capable of producing the alleged foreclosure effects, the Commission must analyse the foreclosure capability of the system of rebates by applying the five criteria listed in paragraph139 of the judgment on the appeal. In addition, where the Commission has carried out an AEC test, that test is one of the factors which the Commission must take into account in assessing whether the system of rebates is capable of restricting competition.

523In the present case, the applicant submitted, during the administrative procedure, on the basis of supporting evidence, that the rebates at issue were not capable of producing the alleged foreclosure effects. In recitals1002 to 1573 of the contested decision, the Commission carried out an AEC test and, in the light of the results of that test, concluded, in recitals1574 and 1575 of that decision, that Intel’s rebates and payments at issue were capable of having or likely to have anticompetitive foreclosure effects, since even an as-efficient competitor would have been prevented from supplying Dell, HP, NEC and Lenovo for their x86 CPU requirements or from having MSH sell computers equipped with its x86 CPUs.

524However, it follows from all of the foregoing that, first, the AEC test carried out in the contested decision is vitiated by errors and, second, as regards the criteria mentioned in paragraph139 of the judgment on the appeal, the Commission did not consider properly the criterion relating to the share of the market covered by the contested practice and did not analyse correctly the duration of the rebates.

525It should be noted, as regards the rebates granted to HP, that it has been held, in paragraph334 above, that the Commission did not establish to the requisite legal standard its finding that, during the period from November 2002 to May 2005, the rebate which Intel granted to HP was capable of having or was likely to have an anticompetitive foreclosure effect, since it has not demonstrated that those effects were present for the period between 1November 2002 and 31September 2003. Even if it were necessary to infer that the AEC test could be regarded as conclusive for part of the period from November 2002 to May 2005, that could not demonstrate to the requisite legal standard the foreclosure effect of the rebates granted to HP, since the Commission did not consider properly the criterion relating to the share of the market covered by the contested practice and did not analyse correctly the duration of the rebates.

526Therefore, the Commission is not in a position to determine that the applicant’s rebates and payments at issue were capable of having or likely to have anticompetitive effects and that they therefore constituted an infringement of Article102 TFEU.

527Consequently, the Court considers that the grounds of the contested decision are not capable of serving as a basis for Article1(a) to (e) of that decision.

528Furthermore, in reply to a question from the Court of 2April 2012, seeking to ascertain, as regards a possible adjustment to the amount of the fine should the contested decision be the subject of annulment in part, the relative value of the infringements consisting of the exclusivity payments compared with the infringements consisting of the naked restrictions, the Commission, in a reply lodged on 8May 2012, replied solely in relation to the gravity of the infringements, arguing that it had assessed the conduct in question as a whole and had come to the view that those infringements complemented and mutually reinforced one another.

529Since the Court is not in a position to identify the amount of the fine relating solely to the naked restrictions, Article2 of the contested decision must therefore also be annulled.

530Article3 of the contested decision must be annulled in so far as it concerns the exclusivity rebates.

531The action is dismissed as to the remainder, having regard, in particular, to the findings in the initial judgment which the Court accepts, as set out in paragraphs96 to 98 above.

The head of claim seeking the annulment of the fine or a reduction in the amount of the fine

532In the light of the foregoing, it is not necessary to give a ruling on the second head of claim, put forward in the alternative.