Intel Vows to Appeal EC Antitrust Ruling, $1.5B Fine

By Jessica Davis  |  Print this article Print

Intel CEO Paul Otellini says that Intel will appeal the EC antitrust ruling and $1.5 billion fine, levied today, that says that Intel violated European antitrust laws. The ruling is the culmination of a long process that began with a complaint filed by Intel rival Advanced Micro Devices in 2001. Intel lost computer processor market share to AMD in Q1.

Intel (NASDAQ:INTC) fired back at the European Commission today and vowed to appeal after the EC ruled against Intel and levied a $1.5 billion fine against the world’s largest computer processor maker, saying Intel violated European antitrust laws.

"Intel takes strong exception to this decision," says Paul Otellini, president and CEO, in a prepared statement. "We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace - characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal."

Otellini says that Intel does not believe its practices violated European law.

"The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not," Otellini says "The Directorate General for Competition of the Commission ignored or refused to obtain significant evidence that contradicts the assertions in this decision. We believe this evidence shows that when companies perform well the market rewards them, when they don't perform the market acts accordingly."

Intel lost 4.7 percent of its processor market share to Advanced Micro Devices (NYSE:AMD) in the most recent quarter, according to data released this week by research company IDC. But Intel still dominates the market with 77.3 percent market share to AMD's 22.3 percent and Via Technologies' 0.4 percent.

Otellini adds: "Intel never sells products below cost. We have however, consistently invested in innovation, in manufacturing and in developing leadership technology. The result is that we can discount our products to compete in a highly competitive marketplace, passing along to consumers everywhere the efficiencies of being the world's leading volume manufacturer of microprocessors."

He concludes: "Despite our strongly held views, as we go through the appeals process we plan to work with the Commission to ensure we're in compliance with their decision. Finally, there should be no doubt whatsoever that Intel will continue to invest in the products and technologies that provide Europe and the rest of the world the industry's best performing processors at lower prices."

Intel is the largest manufacturer of chips of any kind in the world, with revenues of $37.6 billion, while its next largest rival in the computer processor space is AMD with revenues of $5.8 billion.

Smaller rivals have periodically tried to play David to Intel's Goliath in the computer processor business but have not succeeded.

Because of its size, Intel is the only processor maker left that has the funds necessary to own its own chip fabrication facilities.

AMD recently spun out its manufacturing operations into a separate company. And AMD and IBM, together with other processor makers and chip outsourced manufacturing provider Chartered, have formed a consortium to pool their resources to design processors for "leading edge" manufacturing processes. In this context, "leading edge" means the next generation of process design, currently 45 nanometers and soon to be 32 nanometers. 

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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