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Fine is the largest ever levied for antitrust violations in the EU

Intel is the largest CPU maker in the world and dominates the market in many categories. Allegations were made against Intel in Europe that the company was using its dominant market position to reduce competition and prevent AMD from gaining market share.

has been following the EU investigation into Intel closely. This week allegations against Intel were outlined that claimed the chipmaker offered computer makers discounts and incentives to not use AMD products and to cancel AMD products in development.

The New York Times reports that The European Commission has now ruled against Intel and fined the massive chipmaker $1.45 billion. The fine is the largest ever levied against a company by the Commission and eclipses the fine that Microsoft paid to the EU for anticompetitive practices by about two times.

The EU competition commissioner Neelie Kroes says that the massive fine was justified because Intel has denied consumers a choice for CPUs in products. Kroes told the NYT, "[Intel used] used illegal anticompetitive practices to exclude its only competitor and reduce consumers’ choice — and the whole story is about consumers."

Intel CEO Paul Otellini said the firm would appeal the decision. Otellini said, "We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace. There has been absolutely zero harm to consumers."

AMD's Giuliano Meroni, president of European operations said, "[The decision would] shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers."

Kroes also says that Intel went to great lengths to cover up its anticompetitive actions. Part of the ruling against Intel also forces the company to immediately stop offering computer makers rebates that are part of the reason Intel maintains an 80% market share in Europe.

Intel must change these practices immediately pending appeal though it can ask for an injunction. The $1.45 billion fine has to be paid immediately, but will be placed into an account and held until all of Intel's appeals are exhausted. The appeals process could reportedly last for years.

The amount of the fine levied against Intel is certainly massive, but the NYT says it could have been even larger. The European Commission can levy fines as high as 10% of the company's total revenue. With sales of $37.6 billion in 2008, the fine could have reached nearly $4 billion.

Fines collected by the commission are added to its budget, which is around €130 billion reports the NYT. Kroes said, "Now they [Intel] are the sponsors of the European taxpayers."

The huge fine will also serve as a warning to other companies facing investigation by the commission. Regulators in the EU are some of the strictest enforcers of antitrust law in the world. The NYT reports that the EU is so much tougher on antitrust that U.S. firms often file allegations in Europe rather than in America. Intel is also facing inquiries in the U.S. from the FCC over similar allegations.

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I actually agree with this one...
By VaultDweller on 5/13/2009 9:59:05 AM , Rating: 5
While I think the EU's fines and constant interference with Microsoft are total BS, but in this case I do agree that Intel was in the wrong and needed to be penalized... maybe not $1.4 billion penalized, but penalties were in order.

Intel was essentially bribing OEMs not to use competing products, and AMD has been trying to prove this in various jurisdiction for years. If this behavior isn't an anti-competitive abuse, I don't know what is.

RE: I actually agree with this one...
By crystal clear on 5/13/2009 10:15:09 AM , Rating: 2
Intel was essentially bribing OEMs not to use competing products

If it is a crime to give a bribe then it is also a crime to recieve a bribe.

So the OEMs/dealers/vendors should also be fined equally & accordingly.

Why spare the OEMs ? they also are involved in this..they also should be penalized as per your thinking.

RE: I actually agree with this one...
By mvpx02 on 5/13/2009 11:02:26 AM , Rating: 5
So the OEMs/dealers/vendors should also be fined equally & accordingly.

This is where the black & white suddenly becomes gray.

Due to the size of its market share, Intel has a lot of leverage over the OEMs it deals with. Just because they accepted a deal doesn't necessarily mean they really had a choice. Their business depends on a steady flow of Intel products.

Considering Intel's ethics are so poor that they're willing to offer monopolistic bribes to business partners, do you really think they're above taking the next step and strong-arming companies (especially smaller ones) at the negotiation table to get their way.

I'm all for increased accountability, but in cases like this, the line is very blurred.

I certainly believe that every company who is found to have been in collusion with Intel should, at the very least, be fined for not reporting Intel.

RE: I actually agree with this one...
By Pryde on 5/14/2009 2:00:34 AM , Rating: 2
While Market Share certainly has an effect you have to ask why did these OEMs choose to use Intel when AMD had the faster processors?

Was it because AMDs prices were so high?
OEMs sell mostly low priced PCs where price is more important than performance. AMD had no significant price drops until C2D was about to be released.

Could AMD supply enough CPUs to saturate the market?
Simply no, it would of taken years to ramp up to the same production as Intel and OEMs want a reliable supply.

Can AMD stay competitive?
Again no, AMD have released 1 competitive product since C2D (Ph2) but we have yet to see how it will be against Intels yet to be released Core I5.

By eetnoyer on 5/13/2009 11:42:24 AM , Rating: 3
There is a difference between a bribe and extortion. Threat of obliteration qualifies as the latter.

RE: I actually agree with this one...
By omnicronx on 5/13/2009 11:52:06 AM , Rating: 2
Its called extortion. Telling an OEM you will take away their lowered pricing if they did no agree to your terms is illegal. How on earth can these companies compete if they no longer have a competitive advantage against those that agreed to Intel's terms?

RE: I actually agree with this one...
By crystal clear on 5/13/09, Rating: 0
RE: I actually agree with this one...
By BZDTemp on 5/13/2009 3:05:20 PM , Rating: 2
Sine the US is the biggest OPEC customer I think that job falls on the US side of the Atlantic.

As for Russia they are being dealt with but it will take time and essentially things will not really change until they become a democracy. Russia still consider them self a super power so they act like a bully towards everyone not kissing their behind. Just look at their constant provocations with cold war bombers.

Eventually Russia will turn around since their leaders can not supply their citizens with the life they see in the countries they compare them self with. Geographically Moscow is in Europe and before the dictators Russia had close ties with western Europe.

RE: I actually agree with this one...
By crystal clear on 5/13/2009 8:02:06 PM , Rating: 2
Sine the US is the biggest OPEC customer I think that job falls on the US side of the Atlantic.t

Then even in Intel's & Microsoft case as per your thinking-that job falls on the US side of the Atlantic.

Why does the EU pick American companies to fine them & ignores the OPEC & the Russians.

If Intel was a Russian company I am quite sure the EU would think twice before fining them out of FEAR of recieving a even more harsher response from PUTTIN,

By Danish1 on 5/14/2009 2:38:33 AM , Rating: 2
Because AMD filed a complaint duh RTFA.

I don't think AMD has filed any complaints about OPEC's oil prices.

and btw I don't think OPEC is threatening/bribing anyone that buys Norwegian oil.

RE: I actually agree with this one...
By ATC on 5/13/2009 4:44:34 PM , Rating: 3
I read an article recently that went further and said that Intel not only bribed these OEMs but strong-armed them into it. Essentially, OEMs that didn't go along with Intel's bribes and kickbacks to squeeze out Intel's competition, saw themselves facing punitive measures by being cut off from Intel products; not totally but they saw product order backlogs, reduced stocks/availability etc... OEM's aren't in the clear but they were certainly put into a difficult position by Intel; either be in on Intel's little game or be cut off. As much as I am a fan of Intel's products, to say they were in the wrong on this is a major understatement.

If nothing else, this ruling will pave the way for direct AMD lawsuits against Intel and that will somewhat help out AMD but not to the extent that they will make up for all the losses handed to them by Intel's unethical practices.

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