Intel gets record fine in antitrust case

The European Commission found that Intel had abused its dominant market position by engaging illegal anticompetitive practices in the time between October 2002 and December 2008 — actually the practices in part seem to be ongoing, and the EC ordered Intel to immediately cease them. "Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated", explained EU competition Commissioner Neelie Kroess.

According to the findings, Intel used two ways of illegal practices: The company gave hidden rebates to computer manufacturers on the condition to keep production of computers equipped with microprocessors from competitors at a very low level or even at zero. In addition, Intel had paid those manufacturers for halting or delaying product launches for computers based on non-Intel CPUs. The commission lists computer manufacturers Acer, Dell, HP, Lenovo and NEC as receivers of such payments.

In addition, Intel paid retailers on condition to stock only computers with Intel CPUs. By doing so, the chip vendor has choked competition and thus harmed consumers, the commission says. In this case, the company concerned is Media Saturn Holding which runs the MediaMarkt and Saturn chains.

While it was widely expected that the commission will find Intel guilty, the amount of the fine was unclear. Some observers had expected even more — in theory, it could have been up to one tenth of the company's annual sales. At sales of €27.2 billion in 2007, this could have translated into a fine of up to €2.7 billion. In a press release, the EC antitrust commission said that the fine takes in account the duration and gravity of the infringement, and has been calculated based on the value of Intel's x86 CPU sales in the European Economic Area (EEA). The fine is the highest the EC antitrust authorities ever imposed.

The proceedings have been triggered by a complaint of Intel competitor AMD. The reaction at AMD however was rather guarded. "Now the market power can go where it belongs — to the computer manufacturers, the dealers and, in the first place, to the PC buyers", explained Guilano Meroni, President of AMD Europe. "We expect that in a functioning market we can keep up with the monopolist. A test case will be how fast AMD-equipped PCs will be obtainable at the computer outlets mentioned in the case," added Jens Drews, Director Government Relations for AMD.

Intel said it won't accept the ruling. "This is the wrong decision", said Intel president Paul Otellini in a press release. "No end user had any damage, and we are going to appeal."

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