European Commission: Intel violated antitrust laws


— 10:38 AM on July 27, 2007

The European Commission has issued a statement of objections to Intel regarding its alleged anti-competitive practices in the European Union. As the Commission states, the statement "outlines the Commission’s preliminary view that Intel has infringed the EC Treaty rules on abuse of a dominant position (Article 82) with the aim of excluding its main rival, AMD, from the x86 Computer Processing Units (CPU) market."

In the [statement of objections], the Commission outlines its preliminary conclusion that Intel has engaged in three types of abuse of a dominant market position. First, Intel has provided substantial rebates to various Original Equipment Manufacturers (OEMs) conditional on them obtaining all or the great majority of their CPU requirements from Intel. 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. 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.

These three types of conduct are aimed at excluding AMD, Intel's main rival, from the market. Each of them is provisionally considered to constitute an abuse of a dominant position in its own right. However, the Commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anti-competitive strategy.

In response to the Commision's statement of objections, Intel Senior VP and General Counsel Bruce Sewell has issued a statement of his own to say Intel is "confident" that the microprocessor market is "functioning normally." According to Sewell, Intel has behaved in a lawful and pro-competitive fashion, and the Commission's case is based on complaints from AMD alone and not customers. He adds that the statement of objections is preliminary and "does not itself amount to a finding that there has been a violation of European Union law."

Nonetheless, the Wall Street Journal believes the Commission's move "could embroil Intel in a legal process that is likely to rival the European Union's decade-long battle with Microsoft Corp. in complexity." Microsoft has had to pay hundreds of millions of euros in fines so far, and its case with the EU is far from over, so the potential battle Intel faces could be very costly.

   
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