European Commission fines Intel a record $1.44 billion

— 9:38 AM on May 13, 2009

If you listen hard enough, you can probably hear AMD executives laughing and popping open the champagne. As the Associated Press reports, the European Commission has fined Intel a record €1.06 billion ($1.44 billion) for anticompetitive behavior.

The Commission claims Intel abused its dominant market position by "engaging in illegal anticompetitive practices to exclude competitors from the market for computer chips called x86 central processing units." The evidence, as quoted by the AP, seems pretty shocking:

[The Commission] said Intel gave rebates to computer manufacturers Acer, Dell, HP, Lenovo and NEC for buying all or almost all their x86 [processors] from Intel and paid them to stop or delay the launch of computers based on chips from AMD . . . Regulators said [Intel] also paid Germany's biggest electronics retailer, Media Saturn Holding — which owns the MediaMarkt superstores — from 2002 to 2007 to only stock Intel-based computers.

This meant workers at AMD's biggest European plant in Dresden, Germany, could not buy AMD-based personal computers at their city's main PC store.

And there's more:

AMD offered 1 million free chips to one manufacturer — which could not accept because that would lose it a rebate on many millions of other chips. It only took 160,000 free chips in the end, regulators said. . . . Intel's payments to manufacturers ordered the company to delay the European launch of AMD's first business desktop by six months. They were also paid to only sell the AMD line to small and medium companies and to only offer them directly to customers instead of to retailers.

Other manufacturers were paid to postpone the launch of AMD-based notebooks by several months, from September 2003 to January 2004 and from September 2006 to the end of 2006 — missing the key Christmas market.

The Commission's press release has even more dirt on Intel's alleged anticompetitive doings.

Why €1.06 billion? Reportedly, the Commission calculated that figure based on European CPU sales during a five-year, three-month lapse of time, during which it believes Intel broke competition law. (The AP says Europe accounts for 30% of global processor sales.) Technically, the Commission could have gone as high as €2.79 billion ($3.8 billion), or 10% of Intel's 2007 revenue.

As one might expect, Intel isn't too pleased with the decision. Company CEO Paul Otellini calls it "wrong" and says "there has been absolutely zero harm to consumers." The chipmaker plans to hold a press conference about the fine later today. Stay tuned.

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