WORLD> Europe
EU hands down record antitrust fine to Intel
(Agencies)
Updated: 2009-05-14 09:30

BRUSSELS/SAN FRANCISCO – EU regulators on Wednesday slapped a record 1.06 billion euro ($1.45 billion) fine on Intel Corp for antitrust violations and ordered it to halt illegal efforts to squeeze out arch-foe AMD.

EU hands down record antitrust fine to Intel
European Commissioner for Competition Neelie Kroes shows a computer chip at a news conference on Intel at the European Commission headquarters in Brussels, May 13, 2009. [Agencies] 

Analysts say the move, which Intel CEO Paul Otellini vigorously contested, may help AMD recoup some of the market share lost to its bigger and nimbler rival over past years, but is not expected to radically transform Intel's operation.

Related readings:
EU hands down record antitrust fine to Intel EU hits Intel with record $1.45b fine
EU hands down record antitrust fine to Intel Intel draws EU regulator's wrath
EU hands down record antitrust fine to Intel Intel says committed to Chinese investments
EU hands down record antitrust fine to Intel Intel might expand $2.5b investment in Dalian

EU hands down record antitrust fine to Intel Intel to cut 6,000 jobs, close plants

The decision may also force US regulators to act, analysts say, with South Korea and Japan already accusing the company of antitrust violations.

Shares in Intel, which had slid 6 percent since Reuters broke news of the impending sanction on May 7, closed at $15.13, down 8 cents or 0.53 percent, while the Nasdaq fell 3 percent. AMD finished trade on the New York Stock Exchange up 3 cents, or 0.69 percent, at $4.38. It had been up as much as 1.2 percent earlier.

The European Commission said the world's No.1 chipmaker paid computer makers to postpone or scrap plans to launch products using AMD chips, paid illegal rebates to encourage them to use Intel products and paid a retailer to stock only computers with Intel chips.

Intel argued the decision was based on weak evidence that must be reviewed on appeal to an EU court.

"We do not have those kinds of conditions in our contracts. Our contracts are straightforward, consistent worldwide and they are volume-based: the more you buy, the less you pay," Chief Executive Paul Otellini said on a conference call.

"There is a significant amount of evidence that was either ignored or disregarded, or both."

The antitrust fine, imposed after an eight-year investigation, is the biggest the EU's executive Commission has imposed on a company. It surpassed the 896 million euro fine last year on glass maker Saint-Gobain for price fixing, and a 2004, 497 million euro penalty on Microsoft for abuse of dominance.

"Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," European Union Competition Commissioner Neelie Kroes told a news conference.

Whither Intel?

Intel has invested more than 5 billion euros in Europe and employs more than 6,000 people there, mostly in Ireland, its fourth largest global manufacturing site. Otellini saw no change to its investment there.

Analysts said US-based Intel would be able to maintain its market dominance, but the EU's decision could help AMD boost its market share.

"Intel's competitive advantage is not that they cheated or anything like that. It's that they are much larger than their smaller rival AMD. As far as long-term competitive advantage (goes), Intel still has it," said Andy Ng, an analyst at investment research firm Morningstar.

Others saw a historic decision that underscored the EU's determination to ensure dominant companies do not shut rivals out of the market.

"The ruling is hugely important. AMD has been out there for the last five or six years screaming that Intel has been keeping them from getting free access to markets," said Insight 64 analyst Nathan Brookwood.

Kaufman Bros. analyst Shaw Wu said the EU ruling could potentially impact Dell because of its heavy reliance on Intel chips for corporate customers, but not better-diversified HP.

A spokesman for Dell Inc said that the company has sold both Intel and AMD-based products for several years and that it cooperated fully with the EU investigation. Hewlett-Packard declined comment.

   Previous page 1 2 Next Page