Intel and the future of Article 102 TFEU Efthymia Armata, Associate LL.M, MA

OUTLINE I. CONCLUSIONS FOLLOWING THE CJEU’s RULING IN INTEL CASE II. OUTSTANDING ISSUES FOLLOWING THE CJEU’s RULING IN INTEL CASE III. ARTICLE 102 TFEU AFTER THE INTEL CASE IV. GOOGLE SHOPPING CASE IN THE INTEL ENVIRONMENT

I. CONCLUSIONS FOLLOWING THE CJEU’s RULING IN INTEL CASE Consumer welfare 1. What’s the ultimate purpose of article 102? Protection of competitors/economic freedom/fairness or consumer welfare? Exclusivity rebates constitute pricing practices 2. Should exclusivity rebates be assessed as non-pricing practices? The CJEU ratifies the Guidance Paper 3. Should the Guidance Paper, including the AEC test, be abandoned?

I. CONCLUSIONS FOLLOWING THE CJEU’s RULING IN INTEL CASE Consumer Welfare Purpose (§19) Effects-based approach (§20) Application of AEC test to pricing practices (§23-27) Objective necessity and efficiency defence (§28-31) Modernisation- Commission’s Guidance Paper 2009

I. CONCLUSIONS FOLLOWING THE CJEU’s RULING IN INTEL CASE Hoffmann-La Roche Examination of fidelity/exclusivity rebates - Per se illegal Michelin I, British Airways, Michelin II Assessment of loyalty inducing rebates (e.g. individualised/standarised, retroactive target rebate schemes) Examination of all the circumstances, particularly the criteria and rules covering the grant of the rebate

ΙΙ. OUTSTANDING ISSUES FOLLOWING THE CJEU’s RULING IN INTEL CASE 1. Notion of likelihood/capability AG’s Wahl opinion in Intel case: “Capability cannot merely be hypothetical or theoretically possible. […] The aim of the assessment of capability is to ascertain whether, in all likelihood, the impugned conduct has an anticompetitive foreclosure effect. For that reason, likelihood must be considerably more than a mere possibility that certain behaviour may restrict competition”. AG’s Kokott opinion in Post Danmark II case: “It is necessary but also sufficient that the rebates in question can produce an exclusionary effect. […] It would in my view be inappropriate to set a higher bar for assuming the existence of an abuse that is incompatible with Article 82 EC and, for example, to require that the presence of an exclusionary effect must be very likely or particularly likely or must be assumed to be beyond reasonable doubt”.

ΙΙ. OUTSTANDING ISSUES FOLLOWING THE CJEU’s RULING IN INTEL CASE 2. Is the Commission always bound to use the AEC test? CJEU in Post Danmark II: “It is not possible to infer from Article 102TFEU or the case-law of the Court that there is a legal obligation requiring a finding to the effect that a rebate scheme operated by a dominant undertaking is abusive to be based always on the AEC test. The AEC test must thus be regarded as one tool amongst others for the purposes of assessing whether there is an abuse of a dominant position in the context of a rebate scheme” CJEU in Intel: The reading of the judgment suggests that the CJEU placed great importance to the AEC test because in this particular case the Commission itself had applied the AEC test

III. ARTICLE 102 TFEU AFTER THE INTEL CASE 1. Commission’s approach on Qualcomm case (exclusivity payments). Examination of the following circumstances: Qualcomm’s dominant position Conditions of the relevant market (high barriers to entry) Coverage of the market (Apple amounted to a third of the relevant market) Nature and operation of the exclusivity obligation (Apple would have been required to return the exclusivity payments had it decided to source some of its supplies from a rival manufacturer) Price-cost test submitted by Qualcomm (failed to show that its rebates were not capable of having anti-competitive effects) No efficiencies demonstrated

III. ARTICLE 102 TFEU AFTER THE INTEL CASE 2. CJEU’s preliminary ruling in case C-525/16, Meo – Serviços de Comunicações e Multimédia (discriminatory treatment): Application of CJEU’s Intel ruling by analogy to article 102 (c) The conditions of article 102(c) are met, when it is found that the behaviour of a dominant undertaking is discriminatory and tends to distort that competitive relationship “Τhe mere presence of an immediate disadvantage […] does not, however, mean that competition is distorted or is capable of being distorted” The behaviour of the dominant undertaking is abusive only if, having regard to the whole of the circumstances of the case, tends to lead to a distortion of competition Circumstances include: the undertaking’s dominant position, its negotiating power, the conditions and arrangements for charging tariffs, their duration and their amount, and the possible existence of a strategy aiming to exclude from the downstream market one of its trade partners which is at least as efficient as its competitors

III. ARTICLE 102 TFEU AFTER THE INTEL CASE 3. Opinion of AG Wathelet in case C- 123/16, Orange Polska v. Commission: Application of CJEU’s Intel ruling by analogy to calculation of the basic amount of the fine “Commission’s obligation to examine the circumstances of the case is by no means a purely procedural requirement” “The principles adopted by the CJEU in Intel in order to assess an abusive practice’s capability to restrict are relevant, not only when it is a matter of challenging the substantive finding of an infringement, but also when it is a matter of assessing the nature and gravity of the infringement for purposes of determining the amount of the fine”

IV. GOOGLE SHOPPING CASE IN THE INTEL ENVIRONMENT What is the relevant abuse? What is the Commission’s theory of harm? What is the approach of the other enforcement agencies to Google Shopping? What might be the impact of the CJEU’s Intel ruling in the Google Shopping before the General Court?

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