Intel cops €1.06bn fine for abusing dominant position

The EU has slapped a record €1.06bn (£948m) fine on Intel for leaning on five PC manufacturers and Europe’s largest consumer electronics retailer to buy its chips.

In the period from 2002 to 2007, Intel was found to have given hidden rebates to Acer, Dell, HP, Lenovo and NEC, on the condition that they bought all or most of their x86 CPUs from Intel.

The chip giant was also found to have given direct payments to German retail chain MediaMarkt, on condition it stock only computers with Intel x86 CPUs.

In addition, Intel was judged to have engaged in a second form of illegal practice during the period. The European Commission (EC) said the chip giant had 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 EC said Intel’s actions amounted to “illegal anticompetitive practices” to exclude competitors from the €22bn-a-year x86 CPU market.

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

Intel said it will appeal the verdict, arguing that it “ignores the reality of a highly competitive microprocessor market”.

A statement from the EC detailed just how Intel was found to have leaned on four specific manufacturers, although they were only referred to as manufacturers A, B, C and D. In one case, the EC found that Intel had given rebates to a manufacturer from December 2002 to December 2005, conditional on it purchasing exclusively Intel CPUs.

The €1.06bn is more than double the €497m Microsoft was fined by the EU in 2004 for abusing its dominant position.

Intel chief executive Paul Otellini said in a statement: “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.”