Out-Law / Your Daily Need-To-Know

Intel charged by Commission over anti-competitive behaviour

27 Jul 2007, 1:49 pm

The European Commission has formally charged Intel at the end of a six-year investigation into alleged anti-competitive practices. The chip maker follows its business partner Microsoft into an antitrust dispute with the Commission.

The Commission has sent Intel a Statement of Objections about its behaviour. It says that Intel has abused its dominant market position in order to stop rival firm Advanced Micro Devices (AMD) from gaining market share.

The Commission said that it believed that Intel had an "overall anti-competitive strategy" whose elements breached the rules of the EC Treaty in three distinct ways.

"First, Intel has provided substantial rebates to various Original Equipment Manufacturers (OEMs) [i.e. computer makers] conditional on them obtaining all or the great majority of their CPU [chip] requirements from Intel," said a Commission statement.

"Secondly, in a number of instances, Intel made payments in order to induce an OEM to either delay or cancel the launch of a product line incorporating an AMD-based CPU," it said. "Thirdly, in the context of bids against AMD-based products for strategic customers in the server segment of the market, Intel has offered CPUs on average below cost."

Intel must respond within 10 weeks and can request an oral hearing to defend itself against the Commission's allegations. If the Commission finds that its allegations are correct it can order Intel to stop certain behaviour and can fine the firm.

Intel has already said that the allegations are untrue. "The case is based on complaints from a direct competitor rather than customers or consumers," Intel's general counsel Bruce Sewell told news agency Reuters. "The evidence that this industry is fiercely competitive and working is compelling. When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly."

The Commission was responding to complaints from AMD about Intel's behaviour and has been investigating the company for six years. Commission officials raided Intel offices across Europe in 2005.

The Commission is still dealing with action it took against Microsoft over anti-competitive practices three years ago. Microsoft was fined a record €497 million and ordered to supply access to much of its source code. The Commission claims that Microsoft is still in violation of its orders.