The European Commission (EC), the executive
arm of the European Union (EU), has already brought
one mighty opponent to its knees. It fined Microsoft almost $2.6B USD
overall for antitrust violations, including fines
of $690M USD and $1.4B
USD. Microsoft tried to refuse to comply
with EC's verdict, but ended
up paying for it even more in the end.
Now the EU is pursuing chipmaker Intel for allegedly employing
anticompetitive practices such as a price slashing and illegal rebates to drive
smaller chipmakers out of business. The EU issued
formal charges against Intel in July. Intel responded quickly that
were nonsense and that AMD was the one complaining, not the
customers. AMD claimed that Intel
reaped $60B USD in monopoly profits.
Intel fought back demanding a
hearing before the EC where it could argue its viewpoint. Meanwhile,
Intel suffered another loss when its German
offices were raided last month by EU agents, who seized documents
applicable in the antitrust case. Germany was one of the countries in
which Intel is allegedly to have employed price manipulation and illegal
Now Intel has finally gotten its way, in effect, as it had a
chance to plead
its case before an EC hearing. Intel's chief executive Paul Otellini
travelled to Brussels to represent his company at the hearing. Intel,
whose chips are in four out of every five of the world's servers and PCs, has
also been accused by the EC of paying off computer manufacturers to pick Intel
chips over AMD chips. Intel has denied these claims saying it competes
fiercely and legally.
Mr. Otellini addressed Hearing Officer Karen Williams, arguing
that Intel's financial practices were well within the law and that its success
was from having a better product, not illegal maneuvers. Ms. Williams
will report to Competition Commissioner Neelie Kroes on the case at the end of
Commissioner Kroes, who recently championed
the $1.4B USD fine against Microsoft, will make a final suggestion to the full
European Commission about Intel's fate and the amount of a possible fine.
Fines can be up to 10% of a company's global revenue, under EU business
law. Commissioner Kroes previously stated that Intel
may be a larger threat to E.U. business then Microsoft. Following
Commissioner Kroes statement, the EC will put the issue to a vote and come to a
Intel had most of the day yesterday to plead its
case. It discussed proprietary information during the hearing,
requiring several participants to have to leave for extended periods. The
U.S. Federal Trade Commission and New York attorney general's office, who are
investigating possible Intel antitrust violations within the U.S, were both
represented. It is expected that they may launch similar antitrust
campaigns following in the EU's footsteps.
Today several consumer groups will have their chance to
speak. BEUC, a European umbrella group for consumer groups, and
individual groups from the Netherlands, Spain and France will all be represented.
The groups so far have not come out with a firm stance on the allegations, but
Monique Goyens, BEUC director general assured, "We may do so later."
She further stated that BEUC wants to ensure that consumer
issues about pricing and innovation are properly examined and addressed.
AMD and Hewlett Packard are also both going to speak today. Their
accounts and testimony will be critical as their relationships with Intel
figures heavily with the charges leveled against the chipmaker.
The EU, in addition to the Intel office raids, raided multiple
retailers that sold only Intel chips and not AMD chips. The materials
gathered in these raids cannot be used in the hearing. However the EC
could elect to issue new charges against Intel at any point. It did so
three times during the Microsoft case, so such a result is not unexpected.
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