Intel left reeling at EC competition charges

The European Commission (EC) has confirmed that it will be charging Intel with violating European Union (EU) competition laws by abusing its dominant position in the chip market.

The decision will delight rival AMD, which made original complaints in 2000 alleging that Intel was not playing fair. The EU authorities raided Intel’s offices in 2005 and last year AMD made official allegations that Intel was paying off certain PC retailers to sell Intel-only PCs.

In its Statement of Objections, the EC said that Intel had infringed the EC Treaty rules on abuse of a dominant position with the aim of excluding its main rival, AMD, from the x86 CPU market.

The EC said that Intel engaged in three types of abuse of a dominant market position. These include the chipmaker providing substantial rebates to various OEMs, provided they bought most, or all, of their chips from Intel.

Also, the EC found that in some cases Intel made payments to persuade OEMs to either “delay or cancel the launch of a product line incorporating an AMD-based CPU”. Intel is also accused of bidding against AMD for strategic contracts by offering its chips at below cost price.

“These three types of conduct are aimed at excluding AMD, Intel’s main rival, from the market,” the EC statement said. “Each of them is provisionally considered to constitute an abuse of a dominant position in its own right. However, the Commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anti-competitive strategy.”

Thomas McCoy, AMD executive vice president of legal affairs, said: “Consumers know today that their welfare has been sacrificed in the illegal interest of preserving monopoly profits. Intel has circled the globe with a pattern of conduct, including direct payments, in order to enforce full and partial boycotts of AMD.

“The EU action obviously suggests that Intel has, once again, been unable to justify its illegal conduct.”

Intel’s own legal team have been quick to counter. Bruce Sewell, Intel’s senior vice president and general counsel, said: “While we would have preferred to avoid the cost and inconvenience of establishing that our competitive conduct in Europe has been lawful, the Commission’s decision to issue a Statement of Objections means that Intel will have the opportunity to hear and respond to the allegations made by our primary competitor.”

Intel has 10 weeks to reply to the Statement of Objections, which will be followed by an oral hearing. If the EC finds Intel guilty the organisation will face heavy fines.

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