Intel Fined A Record $1.45 Billion By EU

Boy, those suits in the European Union sure know how to dish out the fines. Just over a year after the EU ordered Microsoft to pay fines totaling $1.3 billion for withholding critical information from developers, the same entity has come forward and slapped Intel with a record-setting fine of $1.45 billion. Talk about unceremonious record breaking!

The report states that Intel has been found guilty of "offering improper rebates and other discounts to discourage companies from buying microprocessors from its smaller rival, Advanced Micro Devices," and clearly European regulators don't take too kindly to those types of actions. It's suggested that Intel used its dominant position in order to strongarm others and prop itself up illegally, and after two full years of EU investigation, the quiet complaints from AMD have finally led to this.

"The Commission finds that Intel did not compete fairly, frustrating innovation and reducing consumer welfare in the process," Neelie Kroes, the European Commissioner for Competition Policy, said at a Brussels news conference announcing the fine. "Given that Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for over five years, the size of the fine should come as no surprise."

We're told that the violations took place between 2002 and 2007, a time in which Intel "awarded major computer manufacturers rebates on condition that they purchased all or almost all of their supplies, at least in certain defined segments, from Intel" according to the Commission. Big names such as Dell, HP and Lenovo were all said to have been offered these types of deals, though curiously, no mention was made of punishment for those firms that took Intel up on their offer. Obviously, Intel's not exactly taking the news in stride -- just have a look at an official statement put out early this morning by its President and CEO Paul Otellini, which obviously states that Intel will appeal the ruling:

"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."

Not surprisingly, AMD has chimed in with an official statement on the whole situation. Dirk Meyer, AMD president and CEO, had this to say: "Today’s ruling is an important step toward establishing a truly competitive market. AMD has consistently been a technology innovation leader and we are looking forward to the move from a world in which Intel ruled, to one which is ruled by customers."

Tom McCoy, AMD executive vice president for legal affairs, followed up with this: "After an exhaustive investigation, the EU came to one conclusion – Intel broke the law and consumers were hurt. With this ruling, the industry will benefit from an end to Intel’s monopoly-inflated pricing and European consumers will enjoy greater choice, value and innovation."
Tags:  AMD, Intel, CPU, EU, Fine