Intel gets record 1.06 billion EUR fine from EU

Posted on Wednesday, May 13 2009 @ 13:12 CEST by Thomas De Maesschalck
The European Commission slapped Intel today with a record 1.06 billion euros (approx. $1.45 billion) fine for anti-competitive practices, the fine represents 4.15 percent of Intel's 2008 revenue. The Commission found that Intel abused its market position by giving rebates to promote its own processors and paying manufacturers and vendors to halt or delay introduction of PCs with AMD processors. The fine is more than twice as big as the 497 million euros slap Microsoft received in 2004 for abusing its market position.
The investigation followed complaints by AMD in 2000, 2003 and 2006.

The Commission said that Acer, Dell, HP, Lenovo and NEC had been given hidden rebates if they only used Intel chips.

It also found that Media Saturn, which owns Europe's biggest consumer electronics retailer Media Markt, had been given money so that it would only sell computers containing Intel chips.

"Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," said Competition Commissioner Neelie Kroes.

"Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated."
A document from the EC with more details about the fine can be found over here.

Intel announced it will appeal, as the company does not believe their practices violated European law:
Paul Otellini, Intel Corporation president and CEO today issued the following statement regarding the European Commission decision on Intel's business practices:

"Intel takes strong exception to this decision. 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."

"We do not believe our 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. 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 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."

"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."

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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