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Why Did Intel Even Bother To Appeal?

The European Union’s competition law is so broad, vague and oppressive that it makes America’s antitrust laws look clear by comparison. Well, not really — the American laws are horribly and incurably non-objective — but the EU’s law surely belongs in a separate ring of legal hell.

Get this: Article 102 of the Treaty on the Functioning of the European Union prohibits any “abuse” of a “dominant position” in the market. What’s a “dominant position”? There’s no definition in the law. What’s “abuse”? Likewise, there’s no definition, only a few examples of conduct that “may” be prohibited. My translation: Any and every successful company can be subjected to massive fines, and there’s not a damn thing they can do about it.

Just look at what’s happened to Intel Corp., whose innovative microprocessors have multiplied human productivity incalculably since the 1970s. (You wouldn’t be reading this post unless Intel chips made it possible.) Back in 2009, the EU’s competition czar fined Intel $1.4 billion — the largest EU penalty ever levied — for “abuse” of market position. Now five years later, the company’s appeal has been rejected.

Intel’s sin? Paying computer manufacturers (and a retailer) to prefer Intel’s own microprocessors to those of its competitor, AMD. Some of Intel’s payments took the form of price discounts (as in, customers who agreed to use Intel chips in most or all of their computers were charged less money per chip). In other cases, Intel made direct payments (as in, customers who agreed to postpone, restrict, or cancel the development and launch of AMD products got financial rewards).

The EU could not cite any violation of property rights. Intel did not defraud anyone. Intel did not break any contracts (or, as far as the EU’s official statement reveals, induce others to break their contracts). Intel did not steal or extort any benefits. Customers and retailers were free at all times to take their business elsewhere. But they stayed with Intel because they made more money that way.

And that, as usual, is the problem. Profit-seeking by the world’s most productive and successful companies is the perennial target of antitrust and competition laws the world over. And under laws that authorize penalties for infinitely stretchable concepts like “abuse,” regulators can punish companies arbitrarily. Indeed, the EU’s power under Article 102 is so vast that one wonders why Intel even bothered to appeal.