"The case is referred back to the General Court in order for it to examine the arguments put forward by Intel concerning the capacity of the rebates at issue to restrict competition", the ECJ said in a statement.
Europe's top judges dealt a rare blow to European Union antitrust regulators on Wednesday by sending their case against US chipmaker Intel Corp back to court for an appeal.
The fine of Euro 1.06 billion against Intel was for abuse of its dominant position on the market for computer chips.
The Commission had said Intel had offered its clients price rebates to use its computer chips in preference to those of rival Advanced Micro Devices In (AMD).
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Google is now awaiting decisions from the commission in regard to two more competition cases over its Android operating system and Adsense advertising tools.
The blow to the European Commission could have implications for other open investigations into pricing by dominant companies including cases against Google and Qualcomm, the telecommunications equipment supplier.
If the legal process ends up exonerating Intel it would mark the first major defeat for the Commission on anti-trust fines.
The Commission said it would study the judgment carefully and that it was up to the General Court to review its decision. It could also force the commission to re-examine its strategy in several ongoing cases. The European Commission had taken the position that they were and had imposed the fine.
They did so by making the products of a hypothetical as-efficient competitor more expensive without the rebates than Intel's with the rebates. Intel has been appealing this fine for years and now the European Court of Justice has ordered that the case be revisited in a lower court. The EU also said Intel made payments to electronics retailer Media Saturn Holding on the condition that it only sold computers containing Intel's microprocessors. It was fined €1.06 billion, a record sum until the Commission hit Google with a €2.42 billion sanction in June.