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European Commission Publicizes Intel Emails In New Tack

Posted  September 30, 2009

Don’t put anything in an email that you wouldn’t want on the front page of the newspaper.  Or in a decision of the European Commission slapping a 1.06 billion Euros fine (approximately $1.5 billion) on your company.

On September 21, 2009, the Commission released a public version of its May 13 decision in which it imposed the record fine on Intel, the world’s largest semiconductor chip manufacturer, for violating EU antitrust law by abusing its dominant position in the market for computer chips known as x86 central processing units (CPUs).

What is most striking about the decision is that it quotes emails by executives of Intel and PC manufacturers, which the Commission contends are powerful evidence of Intel’s culpability.  This is the first time the Commission has publicized such evidence.

The Commission may be trying to convince the world that it had sufficient evidence to back up its conclusions.  Possibly the Commission was stung by criticism from the European Ombudsman, who handles complaints against EU institutions.

Following a complaint by Intel, the Ombudsman found that the Commission had failed to take account of potentially exculpatory testimony from a key witness.  That witness, a Dell executive, implied that Dell had chosen Intel CPUs over those of its main competitor, ADM, because of their superior performance, not because of hidden rebates paid by Intel.  The Ombudsman’s conclusions were especially embarrassing to the Commission because this is not the first time it has received such harsh internal criticism.  In a trilogy of cases (Airtours, Schneider and Tetra Laval), the European Court of First Instance overturned Commission decisions that blocked mergers.  Each time, the Court sharply rebuked the Commission for what it said was inadequate fact-finding and a poor analysis of the facts.

Last July, Intel appealed the Commission’s decision to the Court of First Instance.  The stakes are high for the Commission in this appeal.  So far, the criticism it has received from the Court has been essentially confined to merger cases, which involve an ex ante review of conduct that is openly reported to the Commission by the parties.  Raising the fact-finding standards in a case like Intel – in which facts are difficult to uncover due to the secret nature of the conduct at issue (hidden rebates, secret payments) – could set an unwelcome precedent for the Commission.

For more information, see the European Commission’s site relating to Intel.  (Read more)

Tagged in: International Competition Issues,