Intel “harmed millions of consumers”: fined $1.45bn

May 13, 2009
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Intel has been fined a record 1.06 billion euros ($1.45 billion) by the European Commission, who deemed that the company had illegally used "hidden rebates" to push AMD and other rivals out of the CPU market.  Far surpassing Microsoft's 2004 antitrust fine of €497, Intel now have three months to pay up; the fine amounts to 4.15-percent of Intel's total 2008 sales.

Updated with Intel's statement after the cut

Among the accusations are not only that Intel paid computer manufacturers to use their CPUs over and above those of rival firms, but that they secretly paid manufacturers to delay or prematurely halt production of PCs based on AMD processors.  As part of the judgment Intel must halt any illegal practices immediately, which European Union Competition Commissioner Neelie Kroes described as having "harmed millions of European consumers".

Analysts believe that the ruling could impact the processor companies in the US and Asia; however some are pointing to Intel's sheer size and suggesting that the company holds a dominance in the market not so much because of antitrust policies but simply by being much larger.  Intel, unsurprisingly, intend to appeal the ruling.

Update:

Paul Otellini, Intel Corporation president and CEO today issued the following statement regarding the European Commission decision on Intel's business practices:

"Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace – characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal."

"We do not believe our practices violated European law. The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not. The Directorate General for Competition of the Commission ignored or refused to obtain significant evidence that contradicts the assertions in this decision. We believe this evidence shows that when companies perform well the market rewards them, when they don't perform the market acts accordingly."

"Intel never sells products below cost. We have however, consistently invested in innovation, in manufacturing and in developing leadership technology. The result is that we can discount our products to compete in a highly competitive marketplace, passing along to consumers everywhere the efficiencies of being the world's leading volume manufacturer of microprocessors."

"Despite our strongly held views, as we go through the appeals process we plan to work with the Commission to ensure we're in compliance with their decision. Finally, there should be no doubt whatsoever that Intel will continue to invest in the products and technologies that provide Europe and the rest of the world the industry's best performing processors at lower prices."


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