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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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Scared $hitless
By eetnoyer on 5/13/2009 11:38:11 AM , Rating: 3
Intel ought to be terrified by all of the comission rulings and the pending case in the U.S. Assuming that I'm reading things correctly, if AMD prevails in the U.S. court case at proving tortious interference on the part of Intel, they could use the findings as cause to terminate the x86 cross license agreement.

Given the timeline, AMD's claims would take precendence over Intel's claims regarding the foundry spinoff. I wouldn't be surprised if Intel's claims for terminating the agreement a couple of months ago are nothing more than an attempt to pressure AMD to drop the antitrust suit.

I doubt that it would ever get so far, but imagine what would happen if Intel lost the rights to the past 10 years of AMD IP, while AMD retained all of their rights to Intel IP. At the very least, it should make the renegotiation of the cross license agreement very interesting.

BTW, does anyone know when the antitrust suit in the U.S. is schedule to go to trial?

RE: Scared $hitless
By Dribble on 5/13/2009 11:46:13 AM , Rating: 2
Na, in the US they can just pay off all everyone investigating it, and will get away with a meaningless slap on the wrist.

RE: Scared $hitless
By mvpx02 on 5/13/2009 11:48:36 AM , Rating: 2
BTW, does anyone know when the antitrust suit in the U.S. is schedule to go to trial?

March of 2010 last I heard

RE: Scared $hitless
By Pryde on 5/14/2009 2:13:30 AM , Rating: 2
imagine what would happen if Intel lost the rights to the past 10 years of AMD IP, while AMD retained all of their rights to Intel IP.

Now that would be very anti competitive.

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