Win for Intel in antitrust case gives hope to tech giants in Vestager’s sights

Cantillon: Europe’s snail-pace legal system needs to speed up to match pace of tech world

European Competition Commissioner Margrethe Vestager.   Photograph: Reuters

European Competition Commissioner Margrethe Vestager. Photograph: Reuters

 

Intel were the instigators of Moore’s law. A cornerstone of the tech world, it attests that the capacity of computing chips doubles every two years. It’s this speed of innovation and product cycle which has kept the world’s biggest chipmaker in the lead, and arguably thousands in jobs in Leixlip, Co Dublin.

It contrasts starkly with the pace of Europe’s legal system, which has taken 10 years to finally adjudicate on an antitrust case taken by the European Commission alleging that rebates Intel gave to customers were harmful to competition.

On Wednesday, the European Court of Justice ruled that a lower court did not give sufficient airing to Intel’s defence. It rejected the commission’s claim that it didn’t need to prove harm since the rebates were inherently illegal given Intel’s dominant position in the market for a certain kind of microprocessor.

It’s a landmark decision, if not for the case itself, certainly because it is the first time in more than 20 years that the commission has lost on appeal. It also raises the bar on the level of evidence required to impose antitrust fines.

The champagne is on ice at Intel’s Santa Clara headquarters, however, as the ECJ decision simply kicks the case back to the lower court, from where a final decision may take another few years.

Whatever about the pros and cons of the case in question, it does highlight the increasing problem legislators and the judicial system has in coming to terms with the speed and pace of developments in the tech world.

The decision is a undoubtedly a blow to the EU’s competition commissioner Margrethe Vestager, best known here for her ruling last August that Ireland had granted undue tax benefits of up to €13 billion to Apple. The illegal tax aid has created tensions between Brussels and Dublin, given that the latter doesn’t want to be seen as unfriendly to business.

Regarding Wednesday’s decision as a victory for tech giants against Vestager and what is perceived as a general European backlash against Silicon Valley giants is understandable. Yet it’s simply wrong. This is but one battle in a larger war.

It will offer succour to the likes of Google, which faces a separate competition case being pursued by the commission. Vestager recently fined Google €2.4 billion for favouring its own shopping service in search results. It will almost certainly embolden the tech firms to challenge commission rulings.

However, one defeat is not going to deter Vestager or the commission. European legislators bristle at the inherent suggestion from some tech giants that they are not only too big to pander to regional rules, but that they are immune to the laws of the old economy on things like tax and employment.

The authorities need to ensure future antitrust cases are stronger but it’s also in society’s interest that we get more more rapid judicial decisions on these landmark cases. Otherwise the tech firms may rewrite the rulebook by default.

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