Intel has been fined €1.06 billion over secret payments and
rebates to retailers who agreed to sell products containing its
chips and not those of rivals. Though Microsoft has paid out more
for its anti-competitive behaviour, most of those payouts were
penalties for non-payment of the fine, which was €497 million, less
than half the amout demanded from Intel.
A competition law expert said that the fine heralded a new era
of tough anti-competitive enforcement in Europe that is being
matched in the US under the presidential administration of Barack
Obama.
Alan Davis, an expert in competition law at Pinsent Masons, the
law firm behind OUT-LAW.COM, said that the massive fine will lead
to even more payouts as Intel competitors take civil cases on the
back of the Commission's regulatory action.
"This will open the floodgates for competitors to sue," said
Davis. "There was a complainant in this case, AMD [Advanced Micro
Devices], and without question they and other competitors will
pursue a case for damages."
"The fine goes to the European Commission's coffers, not to the
competitors who suffered damage to their businesses because of
Intel's anti-competitive practices," he said. "What is likely to
happen is that action will be started and a massive settlement will
be made."
Intel was found to have made secret payments to retailer Media
Saturn Holding from October 2002 to December 2007 in return for its
agreement only to sell computers with Intel chips in them.
It also gave secret rebates to computer manufacturers in return
for their agreement to purchase only Intel chips or to purchase a
fixed proportion of their chips from Intel. The retailers concerned
were Acer, Dell, HP, Lenovo and NEC.
"As a result of Intel's rebates, the ability of rival
manufacturers to compete and innovate was impaired, and this led to
reduced choice for consumers," said the Commission in a
statement.
"Intel has harmed millions of European consumers by deliberately
acting to keep competitors out of the market for computer chips for
many years," said Competition Commissioner Neelie Kroes. "Such a
serious and sustained violation of the EU's antitrust rules cannot
be tolerated."
Intel had been the subject of raids by the Commission, which has
been investigating the company since 2001 and was formally charged
in 2007. The Commission said that it was sure of how Intel behaved
not just because of what was contained in contracts but what it
found on the raids and what other companies told it.
"Such proof is based on a broad range of contemporaneous
evidence such as e-mails obtained inter alia from unannounced
on-site inspections, in responses to formal requests for
information and in a number of formal statements made to the
Commission by the other companies concerned," the Commission
said.
Davis said that companies with competition concerns will be
facing a tough future. Under George Bush's presidential
administration the US published a proposal to take a relatively
lenient approach to companies who may have been abusing dominant
market positions. That has now changed under the new head of the US
Department of Justice's antitrust division Christine Varney, he
said.
"She withdrew the guidelines and said they were no longer
Department of Justice Policy in what is a huge shift in approach,"
he said. "We can expect a very aggressive policy in the US now on
antitrust issues and on abuse of a dominant position."
Intel is an unusually dominant company with over 70% market
share for the period under Commission investigation. But Davis
warned that there are still lessons for other firms to learn from
its experience, especially those in the technology sector.
"There is a greater likelihood of companies becoming dominant in
the technology sector because they innovate and that becomes a
standard for a number of years and, quite quickly, a company is
dominant," he said.
"For any dominant company this case illustrates the special
responsibility that they have to competitors that you don't have if
you are not dominant. You cannot have unfair loyalty or fidelity
rebates, you can't pay distributors to sell at the exclusion of
competitors," he said.
"There are responsibilities you don't have when you're not
dominant. People might claim that that is unfair, but it is the
price of success," said Davis.
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