The European Union conducts more raids of Intel facilities to further arm itself in its fight against the chipmaker

More bad legal news came for the world's largest chipmaker, Intel, on Tuesday.  Intel's Munich offices were the target of another round of antitrust raids by the European Commission (EC).  These German raids were confirmed by a public announcement from Intel.

Chuck Mulloy, a spokesman for Intel, stated, "I can confirm that there has been a raid on our offices in Munich. As is our normal practice, we are cooperating with authorities."

Jonathan Todd, a spokesman for the Commission in Brussels also stated, "I can confirm that Commission officials have carried out unannounced inspections at the plants of a manufacturer of central processing units (CPUs)."

Todd cited that the raids were carried out to investigate alleged violations of rules against abuse of a dominant position and/or restrictive business practices.  Intel faces a hearing on March 11 and 12 over charges that it participated in price slashing, where it cut retail prices to below the cost of production and is accused of offering substantial rebates in a head-on effort to bulldoze its lagging competitor, Advanced Micro Devices, out of the market. 

The ruling in these hearings may depend somewhat on the analysis of evidence found over the course of the investigation.  However, evidence aside, Intel may face a significantly hostile atmosphere at the hearings, as the European Commission is currently very agressive following a heady $690M USD ruling against Microsoft.  With the EC looking to press more charges against Microsoft, investigating Apple, and charging Intel, it clearly is ready to take a hard stance on what it says are blatant abuses of the market system -- and it stands to gain a bit of financial bounty in doing so.  Chipmaker AMD has constantly complained about Intel's alleged abuses and has encouraged the European Union and other government bodies to aggressively investigate its rival.

If it is ruled by the European Commission that Intel broke antitrust laws, under European Union law, it could be fine Intel up to 10 percent of its global revenue.  Intel's total revenue for 2007 came in at above $40B USD, so such a fine could have a ceiling of around $4B.  The EC would be unlikely to pursue the maximum fine, though, and more likely Intel would receive a fine of around $500M USD to $1B USD, similar to the Microsoft judgement.

"Paying an extra $500 for a computer in this environment -- same piece of hardware -- paying $500 more to get a logo on it? I think that's a more challenging proposition for the average person than it used to be." -- Steve Ballmer
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