Dhe EU Commission has suffered yet another defeat in important competition proceedings before the court. On Wednesday, the responsible EU court in Luxembourg annulled the decision by the Brussels competition authorities to impose a fine of almost one billion euros on the American chip manufacturer Qualcomm.
In January 2018, the Commission imposed a fine of 997 million euros on the company, arguing that Qualcomm had kept competitors out of the market by making exclusive payments to its buyer Apple, thereby illegally abusing its dominant position.
The court accused the Commission of significant procedural errors. According to the decision (Az. T-235/18), these would have impaired Qualcomm’s rights of defence. The court thereby invalidates the Commission’s analysis “regarding the conduct alleged against this company”.
Commission saw anti-competitive behavior
In its decision, the Commission came to the conclusion that Qualcomm, as the market leader, had excluded competitors from the market for standard LTE baseband chipsets for more than five years and thus consolidated its dominant position.
Specifically, the EU competition authority took offense at the fact that Qualcomm paid its most important customer Apple a considerable sum of money – allegedly several billion euros – at least between 2011 and 2016 for the chip sets required for its iPhones and iPads to be obtained exclusively from Qualcomm. According to the Commission, no competitor, no matter how good its products, could challenge Qualcomm in this market.
On the one hand, the court certified that the Commission did not sufficiently document and record the individual allegations against Qualcomm. In addition, the competition authorities did not give the company sufficient opportunity to comment on some allegations. On the other hand, the court doubts the Commission’s analysis of the economic effect of the exclusivity payments.
The authority did not take into account all relevant information. This analysis, among other things, makes the Commission’s decision unlawful. It is unusual for the EU court to declare a Commission decision completely void and thus (for the time being) completely ineffective.
The judgment is likely to have far-reaching consequences for the EU authority’s testing practice – because it obviously has to improve the hearing rights of suspected companies and question their economic analysis.
It can appeal the judgment to the next (and then last) instance and take the legal dispute to the European Court of Justice. For the time being, the commission announced only a careful examination of the verdict.