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Intel granted review into its €1bn EU fine

07 September 2017  |  6578 views  |  0 EU building, Brussels

Chip processor Intel has taken a significant step towards overturning a €1bn fine imposed by the European Commission (EC) after it won the right to a review.

The fine was issued by the EC's Competition Authority as a penalty for Intel's antitrust behaviour back in June 2014 and was one of the biggest such fines to be issued at the time.

But the European Court of Justice (ECJ) has ruled that all of the evidence in the case should be re-examined. The ruling could pave the way for other tech giants and computer hardware manufacturers, such as Google and Qualcomm, to challenge their own rulings from the EC's Competition Authority.

The EC's accusation of anticompetitive behaviour centres on the use of so-called 'exclusivity incentives'. Intel offered rebates to compuer manufacturers in return for buying at least 95% of their chips from Intel.

But the ECJ's ruling has effectively raised the burden of proof on competition authorities and to show more evidence that the use of exclusivity incentives caused harm to its competitors.

The decision was welcomed by Intel, which issued a statement to the Financial Times. "We have always believed that our actions were lawful and did not harm competition. We look forward to the next step in this process, in what is a respectful disagreement between Intel and the EC's competition regulators."

The review does not mean that Intel's fine will be overturned as the EC still views exclusivity incentives as illegal in nature. Nevertheless it will be a big encouragement to other large US tech companies that have fallen foul of the EU's Competition Authority, Qualcomm is being investigated over payments made to Apple over the use of its chips in iPhones and iPads and Google is also being investigated over its contract terms with phone makers and networks using its Android software.

According to competition lawyers, the Intel case will give these tech firms encouragement that they can defend the use of exclusivity incentives if they can demonstrate there was no commercial harm to competitors.

"The court of justice confirms exclusivity rebates as abusive by nature but if a defendant argues, with supporting evidence, that its conduct could not restrict competition from equally efficient rivals, the commission has to rebut that," said Maurits Dolmans of law firm Cleary Gottlieb, which counts Google as a client, speaking to the FT.

There could also be implications for the fintech market given that both Intel and Google were the biggest corporate investors in the fintech market between 2011 and 2014 according to research firm CB Insights,

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