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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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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.

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