This week, Qualcomm successfully appealed against a €997 million ($1 billion) fine imposed by European Union regulators in 2019. The fine was originally given after the European Commission ruled that between 2011 and 2016, the chipmaker had paid billions of dollars to Apple to exclusively use its chips in all of its iPhones and iPads, an act that breaks EU antitrust laws.
The decision to nullify the fine came after the second highest court in Europe, The General Court, found that “a number of procedural irregularities affected Qualcomm’s rights of defense”, ultimately invalidating the Commission’s analysis.
The judgement was also very critical of basic aspects of the Commission legal service’s process, including the fact that meetings with third parties had not been recorded, or that the notes of meetings were too general for Qualcomm to properly understand the complaints made against it.
Cause for concern?
Zach Meyers, senior research fellow at the Centre for European Reform, said these findings could lead to concerns within the Commission legal service that these problems were endemic at the time, leading to other Commission decisions being vulnerable to appeal.
This is the second major loss for the Commission on the issue of rebates and incentives, after the ECJ annulled a €1 billion antitrust fine on Intel back in February.
Meyers said that there could still be worse to come for the Commission, noting that in a few months the ECJ is expected to deliver its judgment in the Google Android case, which investigated if Google provided incentives or imposed requirements on phone manufacturers to pre-install Google applications and search capabilities on Android phones.
“Both the Qualcomm and the Intel judgments suggest the court will assess the Commission’s analysis critically,” Meyers said.
Given there are now multiple occasions where the court has closely scrutinized how the Commission assessed whether rebates were anti-competitive, it indicates that the court is concerned about the Commission’s overall approach to rebates.
Myers explained that by placing a high burden on the Commission to properly analyze the competitive effects of rebates, a process which is data- and labor-intensive, it could cause the Commission to steer away from rebate cases in future, and instead focus more on cases of abusive exploitation, which comes under the scope of the new Digital Markets Act.
“There is a lot of potential harm if the Commission wrongly condemns rebates and discounts as being anti-competitive,” he said.
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