EU upholds 2009 penalty against Intel

Upholding a 5-year-old ruling, the European Commission yesterday found that US chip maker Intel had abused its dominance in the microprocessor market by offering rebates to manufacturers that favoured Intel's products.

As a result of the ruling, Intel will have to pay a record €1.06 billion fine.

The fine is the highest anti-trust penalty levied on a single company by the EU.

An EC investigation concluded that between the fall of 2002 and 2007, Intel deliberately undermined competitor Advanced Micro Devices (AMD) by granting rebates to four major computer manufacturers - Dell, Lenovo, HP, and NEC - as also corporate consumer electronics group Media-Saturn. The companies, in turn promised to purchase most, if not all of their CPUs from Intel.

"Exclusivity rebates granted by an undertaking in a dominant position are, by their very nature, capable of restricting competition and foreclosing competitors from the market," the court said in its ruling.

The New York Times said Intel could still appeal the case at Europe's highest court, the European Court of Justice.

PC Mag quoted a company spokeswoman as saying Intel was very disappointed with the decision, adding that this was a complex case and the decision reflected that. He said the company had started the process of evaluating the court's judgment.

According to the European Commission's 2009 decision Intel had tried to thwart rival Advanced Micro Devices (AMD) by granting rebates to PC makers Dell, Hewlett-Packard Co, NEC and Lenovo for buying most of their computer chips from Intel.

In May 2009, the European Union levied a record $1.44 billion fine against Intel (See: EU fines Intel record $1.44 billion in anti-trust case).

The Commission found that between 2002 and 2007, Intel had paid manufacturers and a retailer to favour its chips over those of Advanced Micro Devices Inc. (AMD).

The Commission also said that personal computer makers Acer, Dell, HP, Lenovo and NEC had all been given hidden rebates if they only used Intel chips.

In the US, Intel agreed to pay $1.25 billion to AMD in April 2009 to settle a four-year civil case (See: Intel pays AMD $1.25 billion to end dispute).

According to the EU competition authority, the company had also paid German retail chain Media Saturn Holding to stock only computers with its chips.

The commission's decision had received the backing of the Luxembourg-based General Court.

"The Commission demonstrated to the requisite legal standard that Intel attempted to conceal the anti-competitive nature of its practices and implemented a long term comprehensive strategy to foreclose AMD from the strategically most important sales channels," the court said in a near 300-page decision.

According to the judges the EU watchdog had not been heavy-handed with the level of the fine, equal to 4.15 per cent of Intel's 2008 turnover, as against a possible maximum of 10 per cent. While commission penalties do not normally hit the top figure, the rising level of fines was a source of worry for many companies.

"The General Court considers that none of the arguments raised by Intel supports the conclusion that the fine imposed is disproportionate. On the contrary, it must be considered that that fine is appropriate in the light of the facts of the case," judges said.

Intel declined to say whether it would take the case to the European Court of Justice.