Following an eight-year investigation, the European Commission found that Intel impeded competition by giving rebates to computer makers that buy all or almost all of their chips from Intel. The penalty is the biggest antitrust fine in the 27-nation EU’s history, more than double the 497 million- euro penalty against Microsoft Corp. in 2004.

The commission’s attack on rebates may increase Intel’s troubles as computer sales decline amid the global economic crisis. Advanced Micro Devices Inc., which originally filed the antitrust complaint in the EU case, gained market share in the first quarter, researcher IDC said.

The EU said Intel gave rebates to computer makers from 2002 until 2005 on the condition that they buy at least 95 percent of chips for PCs from Intel. The commission said the Santa Clara, California-based company imposed “restrictive conditions” for the remaining 5 percent, supplied by AMD.

Intel will appeal the commission’s decision to a European court in Luxembourg, said Bruce Sewell, Intel’s general counsel, in a telephone interview.

EU Competition Commissioner Neelie Kroes said that Intel’s conduct harmed millions of consumers by trying to keep competitors out of the market. Intel kept its market share at about 80 percent by giving rebates to computer makers that bought all or most of their chips from the company, the commission said.

“The commission also said Intel made payments to electronics retailer Media Markt on the condition that it only sell Intel- based PCs. The EU has evidence that Intel “went to great lengths” to cover up its illegal practices and the conditions weren’t in the company’s contracts, Kroes said.

“The Commission was able to gather a broad range of evidence demonstrating Intel’s illegal conduct through statements from companies, on-site inspections, and formal requests for information,” Kroes said.

The 1.06 billion-euro fine is the highest issued by the EU, surpassing an 896 million euro fine against Cie. de Saint-Gobain SA in a cartel case in November. The 497 million-euro penalty against Microsoft came in an abuse of dominance case, the same cause of action as the EU’s against Intel.

The penalty represents about 4 percent of Intel’s $37.6 billion in sales last year, the commission said. Intel had $12.8 billion in cash, debt instruments included in trading assets, and short- and long-term investments as of March 28, the company said last month.

The EU regulator said Intel’s unlawful practices must stop immediately and that it would “actively monitor Intel’s compliance with this decision.”

By: DocMemory
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