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Intel fined €1.06bn in EC antitrust case

EU orders Intel to stop illegal practices

The European Commission has fined Intel €1.06bn after finding it guilty of antitrust violations in the PC microprocessors market.

Intel has been under investigation since 2000 for handing out rebates to computer manufacturers in return for them buying the bulk of their x86 computer processing chips (CPUs) from Intel, as well as paying computer makers for scrapping or delaying the launch of machines fitted with chips made by its nearest rival, AMD. Intel claimed it was simply doing what any company would, only better

Last year the Commission added fresh charges, accusing the chip giant of paying generous rebates to Media Markt, Europe's biggest chain of IT stores, in return for it de-listing all computers containing AMD chips.

Competition Commissioner Neelie Kroes said that the antitrust action is primarily designed to protect consumers. "Intel has harmed millions of EU consumers," she said, adding that the large fine meted out should "therefore come as no surprise".

Although the rebates resulted in a reduction in retail prices, Kroes said that the harm to consumers stems from their not getting the choice of computers that they would have if AMD wasn't suppressed. The Commission also said it planned to monitor Intel's compliance with the ruling itself.

The €1.06 billion fine is the largest antitrust penalty the Commission has ever levied against a single company. The size of the fine was calculated taking into consideration the duration of the antitrust abuse, the severity of the actions, and any mitigating circumstances the company could offer. Antitrust officials said that there were no mitigating circumstances in this case.

Intel dominates the personal-computer chip market with share estimated at 81.9 percent at the end of 2008, while AMD held 17.7 percent, according to IDC.

Intel plans to appeal the ruling and takes "strong exception" to the Commission's decision, according to Intel president and CEO Paul Otellini. He also said the decision is "wrong and ignores the reality of a highly competitive microprocessor market".

"There has been absolutely zero harm to consumers."

The fine dwarfs that against Microsoft which was fined €497m for abusing its dominant position in the software market, plus an additional €1.2bn for failing to respect the antitrust ruling. The Commission also ordered Intel to stop its illegal practices.

Europe isn't the only region where Intel has run into trouble with antitrust authorities. In 2005 the company settled with Japan's competition office. Last year it was fined nearly $20m in South Korea. Meanwhile, the company is under investigation in the US by the Federal Trade Commission.


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