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Intel Fined $1.45B in European Competition Case

The European Union has slapped Intel with a 1.06 billion euro ($1.45 billion) fine for anti-competitive behavior in the x86-based microprocessor market.

The regulatory body found that the world's largest chip maker "harmed millions of European consumers by deliberately acting to keep competitors out of the market." The main company that had alleged the harm was Intel's chipmaking rival, Advanced Micro Devices (AMD).

On Wednesday, Intel President and CEO Paul Otellini commented on the ruling. He said that the finding that Intel violated EU law with illegal sales tactics was without evidence.

"The EU authorities alleged we had exclusive deals with customers (OEMs), but they couldn't find the evidence," Otellini said in an impromptu press conference held this morning. "They went through volumes of contracts and documents and they found nothing. I'm baffled by the allegations."

In a released statement, Intel said that its "principal competitor has been on a concerted campaign to get regulators and courts around the world to prevent Intel from competing aggressively in the market."

The ruling stems from the European Commission's statement of objections released in July 2007, although complaints against Intel were filed by AMD in subsequent years, according to the EC's announcement of the ruling.

AMD has made claims in various world courts (Boston, Delaware, EU and Japan) that Intel offered rebates and financial incentives to companies buying only Intel chips.

Intel and AMD control more than 99 percent of the world's chip market, according to analyst firm Gartner. Intel's share is estimated at about 80 percent.

Otellini told reporters on Wednesday that competition between the two rivals was just that, "competition at work." He noted that Intel, like any other business, offers volume discounts for chipsets and processors and that none of Intel's customers had complained.

In a prepared statement, Intel said it "never sells products below cost" and that because it invests in "innovation, manufacturing and in developing leadership technology," it is able to discount some products to compete in the market.

Otellini noted in the press conference that Intel has "a little north of 5 billion euros invested in the European market," including its second-largest manufacturing facility located in Ireland.

Intel will appeal the ruling, according to released statements.

About the Author

Herb Torrens is an award-winning freelance writer based in Southern California. He managed the MCSP program for a leading computer telephony integrator for more than five years and has worked with numerous solution providers including HP/Compaq, Nortel, and Microsoft in all forms of media.

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