Intel fined $25 million by South Korean antitrust body for violations

The advance of global competitor Advanced Micro Devices (AMD) may not be the only thing worrying the world's largest chipmaker Intel. In a possible sign of things to come, South Korea's antitrust watchdog said Thursday it had fined Intel $25 million for unfair practices.

The Fair Trade Commission said Intel had been fined about 26 billion won, accusing the firm of offering local clients rebates and pressuring them not to buy rival chips such as those from bitter rival AMD.

The anti-trust probe began in June 2005 after rival firms accused Intel of using its dominant market position in dealings with local computer manufacturers.

Rebates to Samsung Electronics Co. and Trigem Computer Inc. breached antitrust rules, the regulatory body said today in a statement. According to it, Intel had offered $37 million in rebates over two and a half years to the aforementioned parties on condition they do not opt for a competitor's products. This, in turn, helped the chipmaker to notch up a market share of 91.3 per cent in the country as compared to 79.6 per cent globally.

However, Intel will probably appeal the ruling, General Counsel Bruce Sewell said.

This verdict comes as a setback for Intel as it awaits a ruling from the European Union (EU), where regulators can fine companies up to 10 per cent of annual sales for antitrust breaches. In 2005, Japan forced Intel to remove clauses restricting Japanese computer makers from using rival chips. Intel has also been sued by AMD in the US.

The European Commission, the EU's executive branch overseeing antitrust regulations, accused Intel in July 2007 of abusing its dominance to wrest sales from AMD, by asking clients to delay or cancel orders with the latter. Both the companies are based in California.

The EU already has a record of being strict with antitrust violators. In February, European Union regulators fined Microsoft Corp., the world's largest software maker, a record 899 million euros ($1.4 billion) for failing to comply with a 2004 antitrust order.

In a statement, AMD welcomed today's ruling, calling the Korean commission a premier antitrust body in exposing Intel's anticompetitive practices.''

Intel declared annual revenues of $38.3 billion I 2007, compared to AMD's $6.01 billion.