The European Commission has imposed a fine of $1.45 billion on Intel Corporation for violating the EC Treaty antitrust rules on the abuse of a dominant market position (Article 82). The EC finds Intel guilty of engaging in illegal anti-competitive practices to exclude competitors from the market for computer chips called x86 central processing units (CPUs). The EC has ordered Intel to cease the illegal practices immediately to the extent that they are still ongoing. The $1.45 billion fine is reportedly the biggest-ever penalty the EC has imposed on a company for anti-competitive practices.

The Commission’s investigation followed complaints from AMD in 2000, 2003 and 2006 (the last having been sent to the German competition authority and subsequently examined by the EC). The Commission’s decision follows a Statement of Objections sent in July 2007, a Supplementary Statement of Objections sent in July 2008 and a letter sent to Intel in December 2008 setting out additional factual elements relevant to the final decision. Intel’s rights of defence have been fully respected in this case, the Commission said.

Paul Otellini, president and CEO, Intel, disputed the EU ruling and stated that the company would appeal against the Commission’s verdict. Otellini said, “Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace—characterised by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal.”

Throughout the period October 2002-December 2007, Intel had a dominant position in the worldwide x86 CPU market (at least 70 per cent market share). The Commission found that Intel engaged in two specific forms of illegal practice. First, Intel gave wholly or partially hidden rebates to computer manufacturers on condition that they bought all, or almost all, their x86 CPUs from Intel. Intel also made direct payments to a major retailer on condition it stock only computers with Intel x86 CPUs. Such rebates and payments effectively prevented customers, and ultimately consumers, from choosing alternative products. Second, Intel made direct payments to computer manufacturers to halt or delay the launch of specific products containing competitors’ x86 CPUs and to limit the sales channels available to these products. The Commission found that these practices constituted abuses of Intel’s dominant position on the x86 CPU market that harmed consumers throughout the EEA (European Economic Area). By undermining its competitors’ ability to compete on the merits of their products, Intel’s actions undermined competition and innovation. The Commission said it would actively monitor Intel’s compliance with this decision.

The world market for x86 CPUs is currently worth approximately $30 billion per year, with Europe accounting for approximately 30 per cent of that.

“Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years,” said Neelie Kroes, competition commissioner, EU. “Such a serious and sustained violation of the EU’s antitrust rules cannot be tolerated.”

The computer manufacturers linked with Intel are: Acer, Dell, HP, Lenovo and NEC. The retailer concerned is Media Saturn Holding, owner of the MediaMarket chain.