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Wednesday, May 13, 2009
EU Slaps Intel With $1.45 Billion Fine in Antitrust Case


The European Commission fined chipmaker Intel a record 1.06 billion euros ($1.45 billion) on Wednesday and ordered it stop giving computer firms illegal rebates against rival AMD.

The fine is the biggest ever imposed on a company by the European Union's executive arm for abuse of market dominance, surpassing the 497 million euro penalty levied on Microsoft in March 2004.

The decision fines a Intel 1.06 billion euros ($1.45 billion), which is the 4.15 percent of Intel's 2008 sales. Intel was ordered to immediate halt to illegal practices, which hurt "millions of European consumers" by paying computer makers to halt or delay products with rival chips. The executive arm of the European Union found the world's largest computer chip maker illegally kept smaller rival AMD out of competition by paying computer manufacturers and retailers not to use its products. The commission said Intel provided rebates to computer makers on condition they bought most of their computer chips from Intel. Intel also made direct payments to major retail chain MediaMarkt so it would only sell computers with Intel's chips, the commission said.

Intel also paid computer manufacturers to halt or delay the launch of the residual number of computers that contained AMD's chips to further reduce customer choice, the commission said.

Responding to the EU's decision, Paul Otellini, Intel president and CEO, issued the following statement:

"Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace ? characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal" .

"We do not believe our practices violated European law. The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not. The Directorate General for Competition of the Commission ignored or refused to obtain significant evidence that contradicts the assertions in this decision. We believe this evidence shows that when companies perform well the market rewards them, when they don?t perform the market acts accordingly."

"Intel never sells products below cost. We have however, consistently invested in innovation, in manufacturing and in developing leadership technology. The result is that we can discount our products to compete in a highly competitive marketplace, passing along to consumers everywhere the efficiencies of being the world?s leading volume manufacturer of microprocessors."

"Despite our strongly held views, as we go through the appeals process we plan to work with the Commission to ensure we?re in compliance with their decision. Finally, there should be no doubt whatsoever that Intel will continue to invest in the products and technologies that provide Europe and the rest of the world the industry?s best performing processors at lower prices."

?Today?s ruling is an important step toward establishing a truly competitive market,? said Dirk Meyer, AMD president and CEO. ?AMD has consistently been a technology innovation leader and we are looking forward to the move from a world in which Intel ruled, to one which is ruled by customers.?

?After an exhaustive investigation, the EU came to one conclusion ? Intel broke the law and consumers were hurt,? said Tom McCoy, AMD executive vice president for legal affairs. ?With this ruling, the industry will benefit from an end to Intel?s monopoly-inflated pricing and European consumers will enjoy greater choice, value and innovation.?

AMD has also filed a U.S. lawsuit against Intel, which is set to be heard in court in 2010.


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