EU fines Intel record $1.45bn

Brussels, May 13:

The European Commission today levied a record $1.45-billion fine on US computer chipmaker Intel for bribing retailers and manufacturers to shut its main rival out of European markets.

The commission found that between 2002 and 2007, Intel “used illegal anti-competitive practices to exclude essentially its only competitor, and thus reduce consumer choice, in the worldwide market for x86 chips,” said Commissioner Neelie Kroes. It is the largest single fine ever imposed by the EU on a private company for anti-competitive practices, with the previous record — EU899 million — belonging to software giant Microsoft.

“Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for over five years, the size of the fine should come as no surprise,” Kroes said. The commissioner said she hoped the scale of the penalty would send “a signal to markets that it is serious stuff we are looking at.”

Brussels began probing Intel, the world’s biggest chipmaker, in 2001, acting on complaints filed by rival electronics firm Advanced Micro Devices (AMD). During the course of its probe, the EU commission found that Intel had excluded its competitor by offering computer manufacturers such as Acer, Dell, HP and Lenovo generous rebates, on condition that they only use its products. It also paid manufacturers to delay the launch of AMD products and bribed major retailers, such as Germany’s Media Markt, to stop selling rival computers.

Kroes said Intel must now “cease the illegal practices immediately” and accused the company of going “to great lengths to cover-up many of its anti-competitive actions.” The decision was welcomed by consumer groups, with the European Consumers’ Organisation saying buyers had been paying “too much for their computers because of Intel’s anti-competitive practices.”

In a statement, AMD said it expected the EU decision to “shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers.” Intel is the world’s largest chipmaker by sales, with annual revenue totalling $37.6 billion in 2008. It has already been found guilty of abusing its dominant market position by regulators in Japan and South Korea.

Intel planned to issue a reaction, including a possible move to appeal the decision, later in the day.