Language of document : ECLI:EU:T:2022:358

Case T235/18

Qualcomm, Inc.

v

European Commission

 Judgment of the General Court (Sixth Chamber, Extended Composition), 15 June 2022

(Competition – Abuse of a dominant position – LTE chipsets market – Decision finding an infringement of Article 102 TFEU and Article 54 of the EEA Agreement – Exclusivity payments – Rights of the defence – Article 19 and Article 27(1) of Regulation (EC) No 1/2003 – Foreclosure effects)

1.      Judicial proceedings – Production of evidence – Time limit – Further evidence lodged after closure of the written part of the procedure – Conditions – Exceptional circumstances capable of justifying such late lodging

(Rules of Procedure of the General Court, Art. 85(3))

(see paragraphs 127-129, 138, 143)

2.      Competition – Administrative procedure – Respect for the rights of the defence – Right to be heard – Infringement on account of an error committed by the Commission – Conditions – Possibility for the undertaking concerned to be better able to ensure its defence had there been no such procedural error – Assessment on a case by case basis

(Art. 102 TFEU; EEA Agreement, Art. 54; Charter of Fundamental Rights of the European Union, Art. 41(2)(a) and (b); Council Regulation No 1/2003, Art. 27(1))

(see paragraphs 157-161)

3.      Competition – Administrative procedure – Powers of the Commission – Power to gather statements – Statements relating to the subject matter of an investigation – Commission’s obligation to record, in a form of its choosing, any interview which it conducts – Scope

(Council Regulation No 1/2003, Art. 19(1))

(see paragraphs 183, 185-191, 196, 198-200, 238, 245, 249)

4.      Competition – Administrative procedure – Access to the file – Documents not contained in the investigation file – Relevance of information not provided for the defence of the undertaking concerned – Extent of the burden of proof incumbent on that undertaking – Consideration of the specific circumstances of the instant case – Infringement of the rights of the defence

(Charter of Fundamental Rights of the European Union, Art. 41(2); Council Regulation No 1//2003, Art. 27)

(see paragraphs 202, 206-208, 210, 212, 224, 252, 256-260, 266, 288, 290-296)

5.      Competition – Administrative procedure – Respect for the rights of the defence – Access to the file – Scope – Inculpatory evidence communicated verbally by a third party before the first investigative act – Obligation to make such evidence available to the undertaking concerned, where necessary by creating a written document

(Art. 102 TFEU; EEA Agreement, Art. 54; Charter of Fundamental Rights of the European Union, Art. 41(2)(a) and (b); Council Regulation No 1/2003, Art. 27)

(see paragraphs 274-283)

6.      Competition – Administrative procedure – Respect for the rights of the defence – Statement of objections – Commission’s assessments evolved during the course of the procedure – Limiting the scope of the objections having an effect on the essential parameters of the economic analysis submitted by the undertaking concerned in order to demonstrate the foreclosure effects alleged were not present – Absence of communication or hearing of the undertaking concerned on that subject – Infringement of the right to be heard

(Charter of Fundamental Rights of the European Union, Art. 41(2) Council Regulation No 1/2003, Art. 27)

(see paragraphs 319-323, 329-334, 336-340)

7.      Dominant position – Abuse – Exclusivity or loyalty rebates – Capability to restrict competition and to have foreclosure effects – Obligation to take into account all the relevant circumstances – Failure to take into account there being no competitor capable of meeting most of the requirements of the beneficiary of the payments at issue during the period concerned


 

(see paragraphs 354-356, 396-398, 405-417)

8.      Dominant position – Abuse – Exclusivity payments – Capability to restrict competition and to have foreclosure effects – Assessment of the actual effects of the payments at issue in relation to part of the requirements of the beneficiary of the payments during a part of the relevant period – Such analysis not sufficient to uphold those payments being capable of having foreclosure effects in respect of all the requirements of the beneficiary of the payments during the relevant period

(Art. 102 TFEU; EEA Agreement, Art. 54)

(see paragraphs 439-442)


Résumé

The applicant, Qualcomm Inc., is a US company which develops and supplies baseband chipsets (‘chipsets’) intended for use in smartphones and tablets to enable them to connect to cellular networks, (1) according to the respective standard. Chipsets are therefore sold to original equipment manufacturers, including Apple, who incorporate them into their devices.

By decision of 24 January 2018 ,(2) the Commission imposed on the applicant a fine of close to EUR 1 billion for having abused its dominance on the worldwide market for chipsets compatible with the LTE standard, for a period lasting from February 2011 to September 2016.

According to the Commission, that abuse was characterised by incentive payments being made, under agreements concluded between the applicant and Apple. Those agreements provided for incentive payments to be made by the applicant to Apple on condition that Apple source all of its LTE chipsets from the applicant. In those circumstances, the Commission took the view that those payments, which it characterises as exclusivity payments, were capable of having anticompetitive effects, in that they had reduced Apple’s incentives to switch to competing LTE chipset providers, which was confirmed by Apple’s internal documents and explanations.

By its judgment, the General Court annuls in its entirety the contested decision, basing its conclusions on, first, the finding of a number of procedural irregularities which affected the applicant’s rights of defence, and, second, an analysis of the anticompetitive effects of the incentive payments, which it found to be incomplete and unfit to bear out such payments as being capable of having anticompetitive effects. In so doing, it provides clarification of the scope of the obligations on the Commission concerning, first, the putting together of the administrative case file in order to enable any undertaking under investigation to assert its rights of defence properly and, second, its analysis of the foreclosure capability of at least as efficient competitors.

Findings of the Court

As a preliminary point, the Court gives its ruling on the admissibility of certain further evidence adduced by the applicant after closure of the written part of the judicial proceedings. That evidence consists, in essence, of two sets of documents stemming from two sets of legal proceedings in the United States. Pointing out that it is admissible to lodge evidence late only if justified by exceptional circumstances, such as it having been impossible to produce the documents concerned earlier, the Court finds that, in the present case, contrary to the Commission’s arguments, taking account, in particular, of the circumstances in which the applicant obtained them, the applicant did not have those documents when it lodged its written submissions. Accordingly, the Court finds that the further evidence so produced is admissible.

As regards substance, the Court examines, first of all, the plea alleging manifest procedural errors, choosing to begin by examining the complaint regarding infringement of the rights of the defence concerning the putting together of the case file, then the differences between the statement of objections and the contested decision.

As regards, on the one hand, the putting together of the case file, the Court points out at the outset that it is for the Commission to record, in a form of its choosing, the precise content of all interviews conducted, under Article 19 of Regulation No 1/2003, for the purposes of collecting information relating to the subject matter of an investigation.

In the present case, the Court finds, first that the information provided to the applicant, on its request, by the Commission after receipt of the contested decision discloses that meetings and conference calls had been held with third parties, in their position as competitors or customers of the applicant. In that regard, the Court takes the view that the evidence concerning the purpose of those exchanges makes it possible to characterise them as interviews subject, as such, to the recording requirement referred to above. In the light of the evidence placed on the file, the Court observes that the notes sent by the Commission give no indication as to the content of the discussions which took place during those interviews, in particular regarding the nature of the information provided on the subjects addressed. Accordingly, the Court finds the first failure on the part of the Commission to fulfil its obligations to record the interviews concerned and to include those recordings in the case file.

Second, the same goes, according to the Court, for the exchanges with a third party, the existence of which was disclosed even later, during the judicial proceedings. Having observed that it was common ground that the Commission had not documented those exchanges, the Court bases its findings on the evidence placed on the file, and on a detailed analysis of their procedural context, to find that they had involved, at least in part, information concerning the purpose of the investigation at issue, and, consequently, that they are interviews which had to be recorded.

Third, the Court finds a further failure on the part of the Commission to fulfil its obligations in putting together the administrative case file. In that regard, it states that the evidence adduced by the Commission before the Court referred to a meeting with a third-party informant which took place before the Commission had commenced its investigation, and to allegations made by that third-party informant at that meeting. After having stated that the Commission had not documented that meeting in any way, the Court considers that such an omission is a procedural defect. Even though there is no requirement to make a record referred to above in relation to interviews before the first investigative act, as in the present case, the Commission nevertheless remains bound, more generally, to enable undertakings under investigation to gain proper access to inculpatory evidence contained in its case file. From that, it follows, in particular, that it is for the Commission to document, in a written document placed in the case file any meeting with a third-party informant which made it possible for it to gather, orally, inculpatory evidence which it intends to use, which, in the present case, it failed to do.

As regards the consequences to be drawn from the three sets of procedural errors thereby established, it is settled case-law that, where such errors exist, an infringement of the rights of the defence can be found only if the applicant undertaking demonstrates that it could have been better able to ensure its defence had those errors not occurred. In the present case, the Court observes that the evidence submitted by the applicant tends to demonstrate that those meetings and those conference calls could have provided information essential to the further course of the proceedings which might have been relevant to the applicant, by making it better able to ensure its defence, in the light, in particular, of the nature of the third parties in question.

As regards, on the other hand, the differences between the statement of objections and the contested decision, the Court observes, first of all, that the contested decision limits itself to finding abuse solely on the market for LTE chipsets, whereas the statement of objections contemplated abuse both on the LTE chipsets market and the UMTS chipsets market. In response to the statement of objections, the applicant sought to demonstrate, by means of an economic analysis known as ‘critical margin analysis’, (3) that the payments at issue were not capable of having foreclosure effects on those two markets. In the contested decision, the Commission rejected that analysis. However, the Court considers that, in so far as the alteration of the objections concerning the scope of the abuse had an effect on the relevance of the data which formed the basis of the applicant’s analysis seeking to challenge the capability of its conduct to have foreclosure effects, the Commission ought to have given it the opportunity to be heard and, where necessary, to adapt its analysis in order to take into account the withdrawal of the objections relating to UMTS chipsets, the supply of which was no longer criticised by the Commission. Accordingly, having failed to hear the applicant on that point, the Court finds that the Commission infringed the rights of defence of the applicant.

Stating that the infringements of the rights of defence of the applicant which had been observed are sufficient to justify setting aside the contested decision, the Court finds it nevertheless useful to continue its examination even after having upheld the plea alleging infringement of the rights of defence.

Accordingly, second, the Court examines the plea alleging manifest errors of law and of assessment seeking to challenge the finding that the payments concerned were capable of having potential anticompetitive effects.

In that regard, the Court points out first of all that, according to established case-law, when an undertaking, relying on evidence, challenges the capability of the conduct alleged against it to restrict competition and, in particular, to have foreclosure effects, it is for the Commission to carry out an analysis of the foreclosure capacity of competitors that are at least as efficient, in order to establish that the conduct alleged is abusive.

As a preliminary point, the Court states that the conduct alleged against the applicant falls solely within the scope of its contractual relations with Apple during the period concerned. The Court, following a detailed analysis of the contested decision and of the information provided by the Commission, observes that, first, the Commission found that the payments concerned had reduced Apple’s incentives to switch to the applicant’s competitors to source LTE chipsets for all its devices, namely iPhones and iPads, basing its conclusions on an analysis of the capability of those payments to have anticompetitive effects. Second, the Commission took the view that those payments had actually reduced Apple’s incentives to switch to the applicant’s competitors to obtain supplies of LTE chipsets for certain of its devices, namely certain iPad models which Apple intended to launch in 2014 and 2015, based on an analysis of the actual effect of those payments.

In that context, the Court examines the applicant’s complaints concerning those two aspects of the Commission’s analysis.

In the first place, the Court finds that, in concluding that the payments at issue were capable of restricting competition for all of Apple’s LTE chipset demand for both iPhones and iPads, the Commission failed to take account of all of the relevant factual circumstances. The Commission had taken the view, in that regard, that the payments at issue had reduced Apple’s incentive to switch to the applicant’s competitors to obtain supplies of LTE chipsets, whereas, as is apparent from the contested decision, Apple had no technical alternative to the applicant’s LTE chipsets for the majority of its requirements during the period concerned, namely that part corresponding, in essence, to iPhones. The Court recalls that, since all the relevant circumstances surrounding the conduct complained of must be taken into account, the analysis of the anticompetitive capability of that conduct cannot be purely hypothetical.

In the second place, the Court observes that the conclusion that the payments at issue had actually reduced Apple’s incentives to switch to the applicant’s competitors to obtain supplies of LTE chipsets in respect of its requirements for certain iPad models to be launched in 2014 and 2015 is not sufficient to determine that they were anticompetitive. In that regard, the Court considers that an analysis of that nature cannot remedy the failure to take account of all the relevant factual circumstances in the Commission’s general demonstration of the capability of the payments at issue to have anticompetitive effects during the period concerned in relation to all of Apple’s LTE chipset requirements. In any event, the Court finds that the analysis of those actual effects in relation to certain iPad models to be launched in 2014 and 2015, first of all, is vitiated by a lack of consistency in the evidence relied on in support of its findings, next, was carried out without taking account of all the relevant factors for that purpose and, finally, was carried out relying on evidence which did not make it possible to support its findings.

Observing, accordingly, that the Commission failed to characterise to the requisite legal standard the payments at issue as constituting an abuse of dominant position, the Court upholds the plea and sets aside, also on that basis, the contested decision.


1      Chipsets are used both for voice services and data transmission. Chipsets are made up of a number of components. Their compatibility with one or more cellular communication standards, such as the GSM, UMTS or LTE standards, is one of their essential characteristics.


2      Commission Decision C(2018) 240 final of 24 January 2018 relating to proceedings under Article 102 [TFEU] and Article 54 of the [EEA Agreement] (Case AT.40220 – Qualcomm (Exclusivity payments)).


3      Such analysis sought to demonstrate that a hypothetical competitor as efficient as the applicant could have competed with the applicant to supply chipsets compatible with the two standards concerned to Apple, and would have been in a position to offer a price covering its costs while also compensating Apple for the loss of the incentive payments at issue.