Intel Slapped with $1.45 Billion Antitrust Fine

By Lawrence Walsh  |  Print this article Print

The European Union levies its largest fine against Intel for anti-competitive practices that reportedly kept AMD from competing fairly in the open market. Those practices included illegal payments and rebates to OEMs to delay or cancel products powered by AMD chips.

Intel received today its sharpest rebuke yet for its alleged manipulative business and antitrust practices at the hands of the European Union, which slapped the California-based chip maker with a record $1.45 billion fine and a cease and desist order to stop anti-competitive activities.

The EU fine is the result of an eight-year investigation into the rebate and business practices of Intel, which commands 77 percent of the global processor and memory chip market. The 1.06 billion euro fine is nearly twice the fine levied against Microsoft in 2004 for anti-competitive business practices and the largest antitrust fine charged against an individual company.

The EU ruling states the Intel paid undisclosed computer manufacturers to delay or cancel the release of products that use processors and chips by Advanced Micro Devices, the No. 2 maker of microprocessors. The European governing body said Intel also paid illegal, secret rebates to stores and computer resellers for not stocking AMD-powered devices.

"Given that Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for over five years, the size of the fine should come as no surprise," European Union Competition Commissioner Neelie Kroes told a news briefing.

Intel reportedly will appeal the fine and the criminal judgment against its business practices. The EU order does not prevent Intel from offering rebates to OEMs and customers, but restricts the use of rebates and other payments from preventing fair competitive marketplace practices.

The EU judgment is just one of several antitrust cases Intel faces. Rival AMD, the alleged target of the antitrust practices, will have its antitrust complaint in the United States heard next year. And Japanese and Korean officials have issued rulings and continue to review Intel practices.

The EU ruling and further actions in the United States are not likely to produce substantive change in the processor market or result in AMD surging in sales or market share. Analysts say the EU’s 2004 ruling against Microsoft for anti-competitive practices related to its bundling its Internet Explorer browser with the Windows operating system did not result in a significant shift in rivals' market share.

At a meeting with market analysts yesterday, Intel CEO Paul Otellini stated the Intel’s second quarter is progressing better than expected and should end with financial performance similar to the company’s first quarter, $7 billion revenue. He also stated that demand for chips was increasing, which signals that the PC market slump had hit bottom.

Lawrence Walsh Lawrence Walsh is editor of Baseline magazine, overseeing print and online editorial content and the strategic direction of the publication. He is also a regular columnist for Ziff Davis Enterprise's Channel Insider. Mr. Walsh is well versed in IT technology and issues, and he is an expert in IT security technologies and policies, managed services, business intelligence software and IT reseller channels. An award-winning journalist, Mr. Walsh has served as editor of CMP Technology's VARBusiness and GovernmentVAR magazines, and TechTarget's Information Security magazine. He has written hundreds of articles, analyses and commentaries on the development of reseller businesses, the IT marketplace and managed services, as well as information security policy, strategy and technology. Prior to his magazine career, Mr. Walsh was a newspaper editor and reporter, having held editorial positions at the Boston Globe, MetroWest Daily News, Brockton Enterprise and Community Newspaper Company.

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