By Mani Raj
The European Commission imposed a record fine against Intel Corp of $1.45 billion (1.06 billion euros) for abusing its dominant position in the global x86 microprocessor market, violating anti-trust rules and other practices used to keep out rival and competitor AMD from the computer chip market.
The European Commission's decision requires Intel to change its business practices immediately. Its decision also stated specifically that:-
* "Intel gave wholly or partially hidden rebates to computer manufacturers on condition that they bought all, or almost all, their x86 CPUs from Intel".
* "Intel made payments to major retailer Media Saturn Holding from October 2002 to December 2007 on condition that it exclusively sold Intel-based PCs in all countries in which Media Saturn Holding is active."
* Intel "interfered directly in the relations between computer manufacturers and AMD. Intel awarded computer manufacturers payments - unrelated to any particular purchases from Intel - on condition that these computer manufacturers postponed or cancelled the launch of specific AMD-based products."
* Intel has so far failed to convince any antitrust enforcement agency that its business practices are lawful and pro-consumer.
In 2008, the Korea Fair Trade Commission (KFTC) issued a 26 billion won fine (approximately $25.4 million USD) saying that Intel's abuse of its dominant position included coercing and paying customers millions of dollars on the condition that they use only Intel chips, delay launches of AMD products, and/or not develop any new products with AMD chips.
The KFTC also found that, "South Korean consumers had to buy PCs at higher prices as domestic PC makers were forced to buy Intel's pricier CPU." In addition to a fine, the KFTC ordered Intel to stop the practice of offering payments to PC makers conditioned upon them not doing business with AMD. Intel is in the process of appealing the ruling.
In 2005, the Japan Fair Trade Commission (JFTC) ruled that Intel had violated the country's anti-monopoly laws by illegally forcing full or partial exclusivity with five Japanese PC makers. Intel did not appeal the ruling.
In the United States, the U.S. Federal Trade Commission (FTC) and New York Attorney General's office are investigating Intel for abuse of its monopoly position. In 2005, AMD filed private litigation in the US District Court of Delaware, which is scheduled for trial in spring 2010.
Intel President and CEO, Paul Otellini said the company plans to appeal against the EC's decision at Europe's Court of First Instance.
This EU antitrust fine is the largest charged on an individual company since an 896-million euro penalty last year against glass maker Saint-Gobain for price fixing. Also a 497-million euro fine in 2004 on Microsoft for the abuse of market dominance.
The Commission stated that Intel must pay the fine within three months of the date of the notification of the decision. This fine accounts for 4.15% of Intel's 2008 turnover.
--------