Intel receives biggest-ever EU fine of $1.5bn

The €1.06bn, or £948m, penalty is a record and more than twice the €497m fine slapped on Microsoft five years ago for similar practices. The commission found that Intel used illegal means to encourage electronic product manufacturers to use its micro-processors and follows a ten-year investigation by the authorities.

The fine was accompanied by an order to stop the practices concerned immediately and that will be accompanied by future monitoring of the company’s activities.

The commission found that Intel had acted illegally between 2002 and 2007 in offering rebates to computer-makers Acer, Dell, HP, Lenovo and German retailer MediaMarkt, to the detriment of the competition. The investigation began in 2000 after rival Advanced Micro Devices made a complaint and the scale of the fine, which has shocked observers, is in line with the long-term nature of the offences.

Intel is not likely to be the last company to be hit by this sort of investigation, with the Obama administration’s focus on antitrust issues mirroring European concerns and increasing the level of corporate anxiety around the globe.

Intel has denied that it broke any European laws and announced that it will appeal against the verdict. Senior vice president Bruce Sewell told the BBC that he would try to "clear our name and exonerate the company" and that Intel “would never pay for any kind of obligation."

WHAT THEY ARE SAYING
Lex, FT: "In terms of the market for microprocessors little will change. The practice in question is allegedly restrictions attached to volume rebates, not the principle of rebates themselves. With about 70 per cent of the market for microprocessors - the central engine of every computer - Intel benefits from a self-reinforcing scale advantage that allows it to outspend AMD on research and development by more than four to one. In technology, trends in market share are rarely reversed. Plodding regulators can do little to change that fact."

Charles Forelle & Don Clark, Wall Street Journal: "The EU action signals that Intel and other dominant companies will have to be more careful in crafting rebate and discounting schemes - and, at least in theory, it might help AMD play a bigger role in markets such as chips used in PCs purchased by corporations. In the meantime, Intel must prepare for possible action by the US Federal Trade Commission, which launched a formal investigation of the company last year. Private antitrust litigation by AMD also goes to trial next year." ·