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| European Court Upholds $1.44 Billion Fine Against Intel | European Court Upholds $1.44 Billion Fine Against Intel |
| (2 months later) | |
| BRUSSELS — An appeals court on Thursday upheld an antitrust fine of 1.06 billion euros against the computer chip giant Intel, giving more teeth to the European Union’s power to hold multinational technology giants accountable — even if the case is years old and Intel no longer wields the sort of power over consumers that got it into trouble in the first place. | |
| In its ruling, the General Court said the penalty, an amount now equivalent to $1.44 billion, was proportionate to the company’s anticompetitive behavior. It is the largest antitrust penalty that the authorities in Brussels have levied on a single company. | In its ruling, the General Court said the penalty, an amount now equivalent to $1.44 billion, was proportionate to the company’s anticompetitive behavior. It is the largest antitrust penalty that the authorities in Brussels have levied on a single company. |
| Chuck Mulloy, a spokesman for Intel, said the company had 70 days in which to decide whether to appeal to Europe’s highest court, the European Court of Justice. | Chuck Mulloy, a spokesman for Intel, said the company had 70 days in which to decide whether to appeal to Europe’s highest court, the European Court of Justice. |
| Five years ago, the European Commission, the executive arm of the European Union, found Intel guilty of misdeeds that included paying rebates to personal computer makers like Dell and Lenovo for favoring its chips over competing ones from Advanced Micro Devices, Intel’s chief competitor in PC chips. | Five years ago, the European Commission, the executive arm of the European Union, found Intel guilty of misdeeds that included paying rebates to personal computer makers like Dell and Lenovo for favoring its chips over competing ones from Advanced Micro Devices, Intel’s chief competitor in PC chips. |
| Antoine Colombani, a spokesman for the European Commission, said at a news conference on Thursday that the decision was a “significant judgment” that showed that regulators were “fully justified in pursuing the anticompetitive conduct in question in a major worldwide market.” Mr. Colombani also suggested that the ruling had emboldened regulators to “vigorously pursue such cases” in the future. | Antoine Colombani, a spokesman for the European Commission, said at a news conference on Thursday that the decision was a “significant judgment” that showed that regulators were “fully justified in pursuing the anticompetitive conduct in question in a major worldwide market.” Mr. Colombani also suggested that the ruling had emboldened regulators to “vigorously pursue such cases” in the future. |
| Intel, which has denied breaking antitrust laws, expressed disappointment in the decision, which has no direct financial effect on it because the company has already paid the fine. | Intel, which has denied breaking antitrust laws, expressed disappointment in the decision, which has no direct financial effect on it because the company has already paid the fine. |
| The ruling might give pause to other big companies with strong market shares in Europe because of the way the court sided with the antitrust regulators’ reasoning in the case. | The ruling might give pause to other big companies with strong market shares in Europe because of the way the court sided with the antitrust regulators’ reasoning in the case. |
| Intel has repeatedly said that its rebates and discounts were legal and a commonly used practice of rewarding companies for purchasing its products in large quantities. But antitrust officials said that, because of its dominance, the way Intel granted exclusivity rebates to gain the loyalty of computer makers was anticompetitive in itself and that no proof of harm was required to deem the actions illegal. | Intel has repeatedly said that its rebates and discounts were legal and a commonly used practice of rewarding companies for purchasing its products in large quantities. But antitrust officials said that, because of its dominance, the way Intel granted exclusivity rebates to gain the loyalty of computer makers was anticompetitive in itself and that no proof of harm was required to deem the actions illegal. |
| “The big concern for large firms with this ruling is that the top European antitrust enforcer is not required to show actual, or even potential, harm to competitors or consumers in dominance cases,” said Paul Lugard, a partner in Brussels with the law firm Baker Botts and the former head of antitrust for Philips, the Dutch electronics company. | “The big concern for large firms with this ruling is that the top European antitrust enforcer is not required to show actual, or even potential, harm to competitors or consumers in dominance cases,” said Paul Lugard, a partner in Brussels with the law firm Baker Botts and the former head of antitrust for Philips, the Dutch electronics company. |
| “What businesses are now looking at is a formalistic standard essentially based on case law from the 1970s that doesn’t reflect modern-day economic insights,” Mr. Lugard, who does not represent any of the companies involved in the judgment, said on Thursday. | “What businesses are now looking at is a formalistic standard essentially based on case law from the 1970s that doesn’t reflect modern-day economic insights,” Mr. Lugard, who does not represent any of the companies involved in the judgment, said on Thursday. |
| Microsoft is another technology titan that has been hit with antitrust fines by the European Commission. And Google has been trying for at least three years to settle an antitrust case with the commission. | Microsoft is another technology titan that has been hit with antitrust fines by the European Commission. And Google has been trying for at least three years to settle an antitrust case with the commission. |
| The decision against Intel, which is the world’s biggest semiconductor company and has about $10 billion in cash and short-term investments, is unlikely to have a significant effect on the company’s operations. But if anything, it is a reminder of the changes buffeting Intel. | The decision against Intel, which is the world’s biggest semiconductor company and has about $10 billion in cash and short-term investments, is unlikely to have a significant effect on the company’s operations. But if anything, it is a reminder of the changes buffeting Intel. |
| The European Commission’s decision to fine Intel five years ago concerned actions that occurred in the personal computer market over much of the previous decade. | The European Commission’s decision to fine Intel five years ago concerned actions that occurred in the personal computer market over much of the previous decade. |
| Since that time, consumers worldwide have taken to buying smartphones and tablets instead of PCs. According to IDC, a technology research firm, worldwide PC shipments last year were 314.5 million units, a drop of 10 percent from 2012. Shipments were lower over most of 2012, as well. | Since that time, consumers worldwide have taken to buying smartphones and tablets instead of PCs. According to IDC, a technology research firm, worldwide PC shipments last year were 314.5 million units, a drop of 10 percent from 2012. Shipments were lower over most of 2012, as well. |
| But Intel has been a laggard in expanding into the new categories, losing out to companies like ARM Holdings and Qualcomm. | But Intel has been a laggard in expanding into the new categories, losing out to companies like ARM Holdings and Qualcomm. |
| Intel’s protracted antitrust case reflects the slow grinding of bureaucratic gears in Brussels; by the time behavior is formally censured, the competitive marketplace can look very different. | Intel’s protracted antitrust case reflects the slow grinding of bureaucratic gears in Brussels; by the time behavior is formally censured, the competitive marketplace can look very different. |
| That is one reason antitrust officials here are now taking different tack, seeking quick settlements that avoid fines and seemingly endless litigation. “High fines and the continued failure of appeals before the E.U. courts to effectively reduce them in cases such as Intel will lead companies to look increasingly to settle with the commission and avoid a fight and a fine,” Dave Anderson, a partner in Brussels with the law firm Berwin Leighton Paisner, who does not represent any of the companies involved in the judgment, said on Thursday. | That is one reason antitrust officials here are now taking different tack, seeking quick settlements that avoid fines and seemingly endless litigation. “High fines and the continued failure of appeals before the E.U. courts to effectively reduce them in cases such as Intel will lead companies to look increasingly to settle with the commission and avoid a fight and a fine,” Dave Anderson, a partner in Brussels with the law firm Berwin Leighton Paisner, who does not represent any of the companies involved in the judgment, said on Thursday. |
| But, Mr. Anderson warned, “Fine levels can certainly rise now.” | But, Mr. Anderson warned, “Fine levels can certainly rise now.” |