European Commission Imposes €1.06 billion Fine on Intel
The European Commission (EC) today imposed a €1.06 billion fine on the Intel Corporation for “abuse of a dominant market position . . . by engaging in illegal anticompetitive practices to exclue competitors from the market for computer chips called x86 central processing units.” The Commission futher ordered Intel “to cease the anticompetitive practices to the extent that they are still ongoing.”
According to the Commission, Intel engaged in a practice of providing substantial rebates to PC manufacturers who either used exclusively or predominantly Intel processors. The rebates themselves were not the basis for the fine, but “the conditions Intel attached to those rebates.”
The Commission also found that Intel made direct payments to manufacturers to delay the launch of products containing processors from rival AMD. This “pay-for-delay” scheme, the Commission finds, was directly aimed at preventing AMD from selling its product on the open market and thus violative of EU Law.
In a speech given at the EC headquarters in Brussels, Nellie Kroes, the EC Competition Commissioner, noted “the fact that Intel had such a large market share is not a problem in itself. What is a problem is that Intel abused its dominant position. Specifically, Intel used illegal anti-competitive practices to exclude essentially its only competitor, and thus reduce consumer choice, in the worldwide market for x86 chips.”
Article 82 of the EC Treaty holds as incompatible with the common market “any abuse by one or more undertaking a dominant position.” The provision is designed to prevent unfair monopolistic practices, such as those engaged by Microsoft. Under current EC regulations, the Commission is empowered to impose a fine of up to 10% of the previous year’s turnover. The Commission places Intel’s global turnover at approximately €22 billion, with European turnover at about €6.6 billion.
In a written statement, Intel President and CEO Paul Otellini stated “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 the decision to the European Court of Justice.
