ICN Unilateral Conduct Workshop 2 November 2018, Stellenbosch Exclusivity rebates in a post-Intel world Massimiliano Kadar DG Competition, European Commission Please edit the Master Layout to include information specific to the presentation. For slides for the DG/DeputyDG, delete “[Directorate], [Unit]”. (1) Slides (i) View… Master… Slide Master, (ii) On the first slide, add the Conference, Venue and Date in the box in the top left corner, (iii) On both the first and second slides, in the bottom left text box, add the Directorate and Unit information, (iv) Close Master View (2) Handout pages (i) View… Master… Handout Master, (ii) In the bottom left text box, add the Directorate and Unit information, (iii) Close Master View (3) Notes pages (i) View… Master… Notes Master, (ii) In the bottom left text box, add the Directorate and Unit information, (iii) Close Master View

The ECJ judgment in Intel Considers conditional rebates as pricing practices, which are illegal when they are capable of foreclosing as- efficient competitors Confirms that a presumption of illegality applies to exclusivity rebates by a dominant company However, clarifies that in case of substantiated submission by the dominant company, an analysis of potential effects has to be carried out Lists factors to be considered (price-cost AEC test not included)

Qualcomm (Exclusivity) Rebates conditional on exclusivity paid to Apple The Decision finds that Qualcomm's payment are exclusivity payments presumed to be illegal However, further to Qualcomm's claims that its conduct was not capable of restricting competition, the Decision: Analyses potential anti-competitive effects in light of: Extent of dominant position and amount of payments Internal documents showing that Apple gave serious consideration to switch in part to Intel Apple's role in the market; and Rebuts Qualcomm's arguments (both on price-cost AEC test and alleged efficiencies)

Google Android: revenue sharing Google entered into Revenue Share Agreements (RSAs) with major manufacturers and mobile network operators, giving them a share of its search revenues, on condition that they exclusively pre-installed Google Search on all their Android devices Decision finds that RSAs were exclusivity payments, presumed to be illegal Decision finds potential harm to competition based on: Contemporaneous evidence Quantitative analysis (AEC test) Lack of constraints by user downloading competing apps

Conclusions The Intel judgment provides a framework for the appraisal of exclusivity rebates The way the framework is applied and the actual sources of evidence necessarily depend on the specifics of individual cases Qualcomm and Google Android demonstrate that: There is no hierarchy between different types of evidence The Commission can prove anti-competitive effects in a number of ways An AEC test is a tool, among many, that can be used to demonstrate effects