ORDER OF THE PRESIDENT OF THE SECOND CHAMBER OF THE GENERAL COURT
1 February 2012 (*)
(Intervention – Interest in the result of the case)
In Case T‑148/10,
Hynix Semiconductor, Inc., established in Gyeonggi-do (South Korea), represented by A. Woodgate and O. Heinisch, Solicitors,
applicant,
v
European Commission, represented by S. Noë, A. Antoniadis, J. Bourke and F. Castillo de la Torre, acting as Agents,
defendant,
supported by
Rambus, Inc., established in Los Altos, California (United States), represented by I. Forrester QC, J. Killick, Barrister, and P. Berghe, lawyer,
intervener,
APPLICATION for the annulment of the Commission’s decision of 9 December 2009 relating to a proceeding pursuant to Articles 102 TFEU and 54 EEA (Case COMP/38.636 – Rambus), making binding the commitments by Rambus, Inc. to limit, for a period of five years, its royalty rates on certain patents for semiconductors for dynamic RAM (DRAM) chips and bringing the procedure to an end, in accordance with Article 9 of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 [EC] and 82 [EC] (OJ 2003 L 1, p. 1),
THE PRESIDENT OF THE SECOND CHAMBER OF THE GENERAL COURT
makes the following
Order
Background to the dispute and the administrative procedure
1 Rambus, Inc. (‘Rambus’) designs and develops high bandwidth chip connection technologies for computers, consumer electronic and communication products (including systems memory, PC graphics, multimedia, workstations, video game consoles and network switches), which it also licences.
2 On 18 December 2002, the applicant, Hynix Semiconductor, Inc. (‘Hynix’), filed a complaint with the European Commission regarding Rambus, pursuant to Article 3 of Council Regulation No 17 of 6 February 1962, First Regulation implementing Articles 85 and 86 of the Treaty (OJ, English Special Edition 1959‑1962, p. 87). In particular, it accused Rambus of charging abusive royalties for the use of certain patents for Dynamic Random Access Memory (‘DRAM’) chips. DRAM chips are a type of electronic memory primarily used in computer systems, but also used in a wide range of other products which need to temporarily store data, such as servers, workstations, printers, PDAs and cameras. According to the complainant, Rambus was engaged in intentional deceptive conduct in the standard setting procedure in relation to those chips undertaken by the American JEDEC organisation, by not disclosing the existence of the patents and patent applications which it later claimed were relevant to the adopted standard. Such behaviour is known as a ‘patent ambush’. DRAM chips which meet the JEDEC standard make up approximately 95% of the market and are used in almost all personal computers. In 2008, worldwide DRAM sales exceeded USD 34 billion (more than EUR 23 billion).
3 On 27 July 2007, the Commission initiated a procedure with a view to adopting a decision under Chapter III of Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty (OJ 2003 L 1, p. 1), and it adopted a statement of objections setting out the problems in terms of competition which it had identified. In its view, that statement of objections also constitutes a preliminary assessment within the meaning of Article 9 of Regulation No 1/2003.
4 In its statement of objections, the Commission came to the provisional conclusion that, at the time it started to assert its patents, that is in January 2000, Rambus held a dominant position on the world DRAM interface technology market, which it has held ever since. The Commission also considered, first of all, that Rambus’ practice of claiming royalties from manufacturers of DRAM in conformity with industry standards, for the use of its patents, which were higher than it would have been able to claim had it not undertaken the alleged intentional deceptive conduct, was questionable in terms of its compatibility with Article 82 EC. In addition, the Commission came to the provisional conclusion that Rambus’ conduct undermined confidence in the standard-setting process given that in the sector in question an effective standard-setting process is a precondition to technical development and the development of the market in general to the benefit of consumers.
5 The statement of objections was notified to Rambus on 30 July 2007. Rambus responded to it on 31 October 2007. A hearing was held on 4 and 5 December 2007 at Rambus’ request. Five undertakings were admitted as interested third parties and submitted observations on the statement of objections.
6 On 8 June 2009, Rambus submitted to the Commission preliminary commitments in response to the allegations set out in the statement of objections (‘the initial commitments’), while disputing the provisional conclusions set out therein.
7 Rambus’ initial commitments had three sections: (i) a general section which provided for a five-year worldwide licence for future DRAM products for all of its patents; (ii) a section providing for the licensing of DRAM chips and for the maximum royalty rates to be charged; and (iii) a section providing for the licensing of memory controllers and the maximum royalty rates.
8 On 12 June 2009, a notice was published in the Official Journal of the European Union, in accordance with Article 27(4) of Regulation No 1/2003. That communication summarised the case and the initial commitments and invited interested third parties to submit their observations.
9 On 23 July 2009, the Commission informed Rambus of the observations on the initial commitments received from the interested third parties. On 14 August 2009, Rambus submitted its revised commitments (‘revised commitments’ or ‘commitments’).
10 In its revised commitments, Rambus agreed, first, not to charge royalties for the SDRAM and DDR standards that were adopted by JEDEC during the time in which Rambus was a member and engaged in the allegedly intentional deceptive conduct. Second, Rambus committed to a maximum royalty rate of 1.5% for the later generations of standards adopted by JEDEC after Rambus’ resignation. Third, Rambus offered that maximum rate to all market participants and guaranteed that the industry would not have to pay more.
11 On 13 October 2009, in accordance with Article 7(1) of Commission Regulation (EC) No 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles 81 and 82 of the EC Treaty (OJ 2004 L 123, p. 18), the Commission informed Hynix that it had adopted the preliminary position that the European Union’s degree of interest was insufficient to pursue the investigation into the alleged infringement. Hynix submitted additional comments on 12 November 2009.
12 By decision of 9 December 2009, relating to a proceeding pursuant to Articles 102 TFEU and 54 EEA (Case COMP/38.636 – Rambus), the Commission accepted and made binding Rambus’ revised commitments, in accordance with Article 9 of Regulation No 1/2003, and concluded that there were no longer grounds for action in the case (‘the decision on the commitments’).
13 By decision of 15 January 2010, the Commission rejected the complaint lodged by Hynix against Rambus, in accordance with Article 7(2) of Regulation No 1/2003.
The procedure before the General Court
14 By application lodged at the Registry of the General Court on 25 March 2010, Hynix brought an action seeking the annulment of the decision on the commitments.
15 The notice relating to that action, which is referred to in Article 24(6) of the Rules of Procedure of the General Court, was published in the Official Journal of the European Union on 5 June 2010.
16 By order of the President of the Second Chamber of the General Court of 30 September 2010, Rambus was granted leave to intervene in the present case in support of the form of order sought by the Commission.
17 By document lodged at the Court Registry on 2 March 2011, STMicroelectronics NV (‘STM’), represented by M. Todino, lawyer, sought leave to intervene in the present case in support of the form of order sought by Hynix.
18 The application to intervene was served on the parties, pursuant to Article 116(1) of the Rules of Procedure of the General Court.
19 By documents lodged at the Court Registry on 1 and 4 April 2011 respectively, the Commission and Rambus objected to that application. Hynix did not file observations within the period prescribed.
20 By document lodged at the Court Registry on 4 April 2011, Rambus stated that it would not be requesting confidential treatment in respect of STM, in accordance with Article 116(2) of the Rules of Procedure.
The application to intervene
Arguments of the parties
21 STM submits that it satisfies the requirements for an individual to be able to intervene and that it must, therefore, be granted leave to intervene in the present case in support of the form of order sought by Hynix.
22 It submits, first of all, that it is an undertaking based in Europe, which is active in the engineering, manufacturing, and marketing of semiconductors on a worldwide basis. It states that it produces one of the industry’s broadest ranges of semiconductor products, from discrete diodes and transistors through complex system devices, to complete platform solutions. Those products include chips with embedded controllers for DRAM that comply with JEDEC standards. Accordingly, the decision on the commitments has a direct, material and individual impact on STM to the extent it sets the terms, including the level of royalties, and conditions under which Rambus’ patents may be licensed to it.
23 In that regard, STM states, more specifically, that its ability to manufacture, its manufacturing costs and its competitive situation on the market are affected by the outcome of Hynix’s action. Should Hynix’s action be upheld by the Court, the decision on the commitments would be annulled, as a consequence of which the Commission would be bound to re-open the investigation and fully address the competition concerns resulting from Rambus’ anti‑competitive conduct, either by re-determining the scope of the commitments, or by adopting a final decision following a fully-fledged investigation.
24 STM then sets out a certain number of substantive complaints which it seeks to submit against the decision on the commitments, in support of the form of order sought by Hynix. The failings of that decision, highlighted by those complaints, have a direct, individual and material detrimental impact over its costs and commercial viability.
25 In that context, it states, in particular, that, on 1 December 2010, Rambus lodged a complaint before the United States International Trade Commission (‘ITC’), seeking a general exclusion order against any semiconductors imported into the United States for alleged unauthorised use of certain patents referred to in the decision on the commitments. STM considers that that complaint, which deprives that decision of useful effect, would not have been possible had the decision been adopted correctly.
26 As regards its non-involvement in the administrative procedure, STM submits that, according to case‑law, such non‑involvement does not preclude a third party from intervening in subsequent proceedings before the Court, as long as its competitive situation is substantially affected by the contested act. STM adds that it did not participate in those administrative proceedings because it believed that the Commission’s investigation concerned only DRAM chips combined with stand-alone memory controllers, such as those manufactured by Hynix, rather than chips using only embedded memory controllers of the type manufactured by STM. However, the decision on the commitments concerns both types of chip.
27 The Commission begins by specifying what DRAM chips are (see paragraph 2 above) and notes that their interface technology was standardised by JEDEC, part of which is covered by Rambus’ patents. It states that memory controllers manage flows of data to and from the main memory (i.e. the DRAM chip) of an electronic device. In so far as they interoperate with DRAM chips, they need to be in line with the interface technology standards in place for such chips.
28 In so far as concerns the relevance of memory controllers to the investigation in this case, the Commission states that its investigation concerned Rambus’ behaviour relating to interface technology standardised by JEDEC. In the statement of objections, the Commission found there was a technology market for DRAM interface technology and that demand for licences was determined by the demand for DRAM chips. Memory controllers were referred to only in an ancillary manner in the statement of objections, since they were not standardised by JEDEC and the alleged behaviour of Rambus did not concern memory controllers as such. That being so, the Commission admits that manufacturers of memory controllers need, in principle, to obtain licences from Rambus for DRAM interface technology, which is why Rambus offered commitments also covering those products.
29 Notwithstanding those considerations of a general nature, the Commission considers that STM cannot be granted leave to intervene in the dispute. In its view, unlike what was found in relation to Alrosa in the case which gave rise to the judgment in Case T‑170/06 Alrosa v Commission [2007] ECR II‑2601, paragraph 39, neither the decision on the commitments, nor its possible annulment, has a direct and immediate effect on STM’s legal position.
30 First, the Commission submits that the decision on the commitments does not oblige STM to use Rambus’ services or deprive it of the opportunity to do so. Nor does it require STM to accept the maximum royalty rates set out in the commitments, since the interested party remains free to negotiate better terms.
31 Second, if the decision on the commitments were annulled, the commitments would no longer be binding on Rambus. However, STM does not explain how such a result would be of interest to it, whether legally or financially. In that regard, the Commission has not provided any information to the Court about its contractual relationship with Rambus. STM appears to accept that it needs to obtain licences from Rambus, yet it does not explain whether it has an agreement with Rambus and, if so, how it would be impacted by the annulment of the decision on the commitments. If such an agreement has not been concluded and if Rambus is simply trying to assert its patents with respect to STM, then STM again does not explain how the annulment of the decision on the commitments would change its situation. As for the allegation that the decision on the commitments ‘sets the terms’ of any agreement between Rambus and STM, the Commission considers that that allegation is erroneous, for the reasons set out in paragraph 30 above. In addition, if the decision on the commitments were to be annulled, in the Commission’s view, Rambus would be in an even stronger negotiating position because it would be unburdened of those commitments.
32 The fact that the Commission would be required to take appropriate action under Article 266 TFEU to comply with the Court’s judgment could lead to various outcomes, including re-opening the investigation or re-adopting the decision on the commitments. However, the mere fact of wanting to see a further investigation into Rambus’ conduct is not sufficient, in the Commission’s view, to constitute a direct and present interest in the result of the case.
33 As regards the American procedure before the ITC, referred to in paragraph 25 above, STM does not explain how it deprives the decision on the commitments of useful effect. No other company has raised such an argument. In any event, that is not related to the decision on the commitments as such, but to Rambus’ subsequent conduct.
34 As to the remainder, the Commission rejects STM’s substantive complaints regarding the alleged failings of the decision on the commitments (see paragraph 23 above).
35 In so far as concerns STM’s non-participation in the administrative procedure, the Commission notes that STM never complained of Rambus’ conduct with respect to memory controllers, even though it could be understood from the notice published in the Official Journal on 12 June 2009 that they were also concerned.
36 Finally, and in any event, the Commission submits that this case is not about memory controllers. Out of 256 paragraphs in the application for annulment, only two mention memory controllers and only in a marginal manner. In summary, the procedure initiated by Hynix concerns DRAM chips, and not memory controllers.
37 Rambus also submits that STM should not be granted leave to intervene in the case because it has failed to demonstrate sufficient interest in its result. In that context, Rambus contests STM’s substantive arguments (see paragraph 23 above) and, as to the remainder, sets out arguments largely similar to the Commission’s.
38 In that regard, Rambus submits, more specifically, that the application to intervene is based on the false premiss that the decision on the commitments sets the terms and conditions under which Rambus’ patents may be licensed to STM, whereas that decision merely sets the maximum rates which Rambus could charge if STM were to decide to take such a licence. However, STM has not expressed the slightest interest in doing so. Even if that were the case, that decision does not set out the terms and conditions for such a licence.
39 In addition, the procedure before the ITC, referred to in paragraph 25 above, is irrelevant in Rambus’ view. The reason why STM is involved in those proceedings, which relate solely to US territory, is that it has infringed, and continues to infringe, Rambus’ patents in the US. The decision on the commitments is irrelevant to that issue, all the more since the claims raised by Hynix in the European Union have, according to Rambus, been rejected by the American courts.
40 As regards STM’s non-participation in the administrative procedure, Rambus submits that this creates, in any event, a presumption that it does not have any interest in the result of the present case. STM has not made any submission capable of rebutting that presumption.
Assessment of the President
41 By virtue of the second paragraph of Article 40 of the Statute of the Court of Justice, which applies to proceedings before the General Court by virtue of the first paragraph of Article 53 of that Statute, any person which can establish an interest in the result of a case, except in cases between Member States, between institutions of the European Union or between Member States and institutions of the European Union, may intervene in that case.
42 It is settled case‑law that the concept of an interest in the result of the case, within the meaning of the second paragraph of Article 40 of the Statute of the Court of Justice, must be defined in the light of the precise subject-matter of the dispute and be understood as meaning a direct, existing interest in the ruling on the forms of order sought and not as an interest in relation to the pleas in law or arguments put forward. The expression ‘result’ is to be understood as meaning the operative part of the final judgment which the parties ask the Court to deliver. It is necessary, in particular, to ascertain whether the intervener is directly affected by the contested act and whether its interest in the result of the case is established (see the order of the President of the Grand Chamber of the Court of First Instance (now the General Court) of 28 November 2005 in Case T‑201/04 Microsoft v Commission, not published in the ECR, paragraph 44 and the case‑law cited).
43 Moreover, a decision taken under Article 9 of Regulation No 1/2003, which has the effect of bringing to an end the proceedings to establish and penalise an infringement of the competition rules, cannot be considered as being a mere acceptance on the Commission’s part of a proposal that has been freely put forward by a negotiating partner, but constitutes a binding measure which puts an end to an infringement or a potential infringement, as regards which the Commission exercises all the prerogatives conferred on it by Articles 81 EC and 82 EC, with the only distinctive feature being that the submission of offers of commitments by the undertakings concerned means that the Commission is not required to pursue the regulatory procedure laid down under Article 85 EC and, in particular, to prove the infringement (Alrosa v Commission, paragraph 87).
44 By making a particular type of conduct of an operator in relation to third parties binding, a decision adopted under Article 9 of Regulation No 1/2003 may indirectly have legal effects erga omnes, which the undertaking concerned would not have been in a position to create on its own; the Commission is thus their sole author from the time at which it makes binding the commitments offered by the undertaking concerned and accordingly assumes sole responsibility for them (Alrosa v Commission, paragraph 88).
45 In addition, it is possible to reopen the proceedings in accordance with Article 9(2) of Regulation No 1/2003 in only three cases: where there has been a material change in any of the facts on which the decision was based; where the undertakings concerned act contrary to their commitments; and where the decision was based on incomplete, incorrect or misleading information. Since the situations justifying a reopening are thus exhaustively listed, a third party could not request that the proceedings be reopened on the basis that the principle of proportionality has been infringed. Furthermore, the Commission would have discretion to refuse to reopen proceedings (Alrosa v Commission, paragraph 155).
46 That case‑law makes it possible to reject, from the outset, all of the Commission’s arguments summarised in paragraphs 29 and 30 above, in so far as its arguments are based on the premiss that a third company is not, except in exceptional circumstances such as those at the origin of the judgment in Alrosa v Commission, sufficiently affected by a decision adopted under Article 9 of Regulation No 1/2003 to be able to obtain intervener status in proceedings seeking the annulment of that decision. The Court of Justice has also held, in a general manner and unreservedly, that it is permissible for a third undertaking which regards itself as affected by such a decision to protect its rights by bringing an action against it (Case C‑441/07 P Commission v Alrosa [2010] ECR I‑5949, paragraph 90). The same must apply, by analogy, to intervention in such an action.
47 In the present case, the issue arises, inter alia, as to what constitutes an abusive practice with respect to standardisation, in particular so far as concerns ‘patent ambushing’ by an undertaking in a dominant position. More specifically, the present case raises the issue whether the commitments by Rambus, in particular in the form of royalty caps, are sufficient to eradicate the problems in terms of competition found by the Commission, which may also involve an assessment of the extent to which and the conditions under which Rambus is entitled to charge royalties on its patents for semiconductors for DRAM chips, without that giving rise to reasonable doubts on the part of the Commission.
48 In so far as, in accordance with Article 9(2) of Regulation No 1/2003, a corollary of the decision on the commitments is that, in principle, the Commission has refrained from still finding that the charging by Rambus of capped royalties for the use of its patents by manufacturers of DRAMS and memory controllers in accordance with industry standards is incompatible with Article 82 EC, even though, in its preliminary evaluation, the Commission envisaged making such a finding and did not rule out imposing zero royalties on Rambus, that decision produces direct and immediate effects on STM’s situation, since that undertaking is present and active in the downstream sector of DRAM memory controllers, which is directly affected by the conduct of Rambus of which Hynix complains (see, by analogy, Alrosa v Commission, paragraph 39). Both STM’s legal position and its economic and commercial interests may thus be affected by the outcome of the case before the Court (see, by analogy, the order in Microsoft v Commission, paragraphs 46 and 47).
49 In that regard, it must be found, in the light of the arguments of STM, summarised in paragraphs 22 to 25 above, and the other factors to which they refer, that, as a manufacturer of DRAM memory controllers in conformity with industry standards, and in the light of Rambus’ position on the market concerned as a result of its patents, STM has no choice but to be a current or potential contracting partner of Rambus, in a commercial relationship whose content is defined, in part, by the decision on the commitments. That decision is thus capable of substantially affecting STM’s economic and financial position in its relations with Rambus.
50 As regards the Commission’s argument that Hynix’s complaint, as well as its investigation, related to DRAM chips and not memory controllers (see paragraphs 28 and 36 above), it should be added that the decision on the commitments in fact relates to both of those products. JEDEC-standardised DRAM interface technology is relevant for both DRAMs and DRAM memory controllers. Since DRAM memory controllers have to be conceived specifically to interact with a DRAM chip, and their interface thus has to be compatible with that standardised technology, the argument that they are different products is irrelevant. The repercussions of Rambus’ conduct are in fact identical, for both products, since it concerns their interface technology. In its statement of objections (paragraph 574), the Commission set out, moreover, its intention ‘to order Rambus to provide a licence … to companies producing or selling DRAM and non‑DRAM products that comply with all or any generation of the JEDEC DRAM standards …’, that is to say, according to footnote 901 of the statement of objections, ‘memory controllers or other non-memory-chip components’. Moreover, the Commission itself recognises, in its observations on the application for intervention, that memory controllers need to interoperate with DRAM chips and therefore need to comply with the standards in place for the latter (see paragraphs 27 and 28 above).
51 It follows from all of the above considerations that STM is financially and legally affected by the contested decision.
52 As regards the Commission’s argument summarised in paragraph 31 above, although it is not disputed that STM has no right to obtain a decision in line with Hynix’s complaint if the administrative procedure were to be reinitiated following the delivery of a judgment declaring annulment in the present case, or even any guarantee to that effect, the fact remains, none the less, that it had a direct interest in the adoption of such a decision and, consequently, a direct interest in intervening in support of Hynix’s action contesting the rejection of that complaint, which itself is the corollary of the adoption of the decision on the commitments. If the decision were to be annulled, the Commission would be required to reconsider Hynix’s complaint, taking account of the assessment made by the Court, which would give STM an additional chance of seeing an outcome to that complaint that was favourable to it (see, by analogy, Case T‑351/05 Provincia di Imperia v Commission [2008] ECR II‑241, paragraph 33, upheld on appeal by order of the Court of Justice of 5 March 2009 in Case C‑183/08 P Commission v Provincia di Imperia, not published in the ECR, paragraph 20).
53 It necessarily follows that STM has a direct and certain interest in the granting of the form of order sought by Hynix, seeking the annulment of the contested decision.
54 No argument to the contrary can be derived from the fact that STM did not avail itself in this case of the procedural rights available to it under Article 27(4) of Regulation No 1/2003 as an interested third party, and did not submit written or oral observations in the administrative procedure during which the decision on the commitments was adopted. As regrettable as it may be, that fact has no impact on the assessment of STM’s interest in intervening. If the capacity to bring proceedings of third parties were made subject to their actually taking part in the market consultation procedure, this would be tantamount to introducing an additional condition of admissibility in the form of a compulsory pre-litigation procedure, which is not provided for in the second paragraph of Article 40 of the Statute of the Court of Justice (see, to that effect and by analogy, Joined Cases T‑528/93, T‑542/93, T‑543/93 and T‑546/93 Métropole television and Others v Commission [1996] ECR II‑649, paragraph 62 and the case‑law cited). At the very most, account could be taken of that fact, if appropriate, when allocating costs, if it were to become apparent that STM’s participation in the administrative procedure would have prevented this case from arising or helped to resolve it.
55 In view of the foregoing, it is thus appropriate to grant STM’s application for leave to intervene.
56 Since the application to intervene was brought in accordance with Article 115 of the Rules of Procedure and STM has justified its interest in the result of the case, that application must be granted, in accordance with the second paragraph of Article 40 of the Statute of the Court of Justice. As the notice in the Official Journal of the European Union provided for in Article 24(6) of the Rules of Procedure was published on 5 June 2010, the application to intervene was submitted outside the time-limit prescribed in Article 115(1) of the Rules of Procedure, and the intervener’s rights will be those provided for in Article 116(6) of those rules.
On those grounds,
THE PRESIDENT OF THE SECOND CHAMBER OF THE GENERAL COURT
hereby orders:
1. STMicroelectronics NV is granted leave to intervene in Case T‑148/10 in support of the form of order sought by Hynix Semiconductor, Inc.
2. STMicroelectronics NV will be able to present its observations at the oral procedure, on the basis of the Report for the Hearing, which will be communicated to it.
3. Costs are reserved.
Luxembourg, 1 February 2012.