INTEL in trouble
EU fines Intel $1.45 billion for sales tactics
The European Union fined Intel Corp. a record euro1.06 billion ($1.45 billion) on Wednesday, saying the world's biggest computer chip maker used illegal sales tactics to shut out smaller rival
The fine exceeded a euro899 million monopoly abuse penalty for Microsoft Corp. last year. Intel called the decision "wrong" and said it would appeal.
Intel, based in
The European Commission says Intel broke EU competition law by exploiting its dominant position with a deliberate strategy to keep
It said Intel gave rebates to computer manufacturers Acer, Dell, HP, Lenovo and NEC for buying all or almost all their x86 computer processing units, or CPUs, from Intel and paid them to stop or delay the launch of computers based on
Intel president and
Regulators said the company also paid
This meant workers at
"Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," said EU Competition Commissioner Neelie Kroes. "Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated."
Kroes joked that Intel would now have to change its latest global ad campaign — "sponsors of tomorrow" — to proclaiming "the sponsor of the European taxpayer."
"I can give my vision of tomorrow for Intel here and now: Abide by the law," she added.
EU regulators said they calculated Intel's fine on the value of its European chip sales over the five years and three months that it broke the law. Europeans buy some 30 percent of the euro22 billion ($30 billion) in computer chips sold every year.
They could have gone even higher as EU antitrust rules allow them to levy a fine of up to 10 percent of a company's annual global turnover for each year of bad behavior. Intel's worldwide turnover was euro27.9 billion ($38.8 billion) in 2007.
European consumers group BEUC welcomed the fine and said Intel should be held to account to consumers through civil suits in European courts. So far these are rare but the EU is urging victims of antitrust action to seek damages.
"Intel should be liable to compensate the victims of its illegal practices," said Monique Goyens, head of the group. "Consumers have been paying too much for their computers and they should be compensated."
The manufacturer rebates started in 2002, the EU said, with most ending in 2005 — apart from a 2007 deal for one unidentified company to only source notebook computer chips from Intel.
Regulators said rebates that give discounts for large orders are illegal when a monopoly company makes them conditional on buying less of a rival's products or not buying them at all.
Manufacturers depend on Intel to supply most of the chips they need and faced higher costs if they lost most or all of a rebate by choosing
Hewlett-Packard buys a fifth of Intel chips with Dell taking 18 percent, according to market research from
The discounts were so steep that only a rival that sold chips for less than they cost to make would have any chance of grabbing customers, the EU executive said.
It said
Intel's payments to manufacturers ordered the company to delay the European launch of
Other manufacturers were paid to postpone the launch of
The European Commission said Intel tried to conceal the conditions attached to these payments and details only emerged from e-mails that regulators seized in surprise raids on the companies.
Regulators refused to rule out returning to other parts of their probe where they had investigated Intel's behavior in the server market and allegations of below-cost pricing designed to hurt
The EU charges also cover a time when
Intel fought back successfully by rolling out Core chips. More recently, it has grabbed more market share with Atom chips for netbooks.
EU regulators are not the only ones chasing Intel —
And the
|