Intel To Challenge Huge European Antitrust Fine

Executives at Intel are preparing their appeal against the $1.45 billion (£895m) antitrust fine levied by the European Commission three years ago.

According to the regulators, that huge fine was because of Intel’s alleged anti-competitive behaviour aimed at limiting systems makers’ use of chips from rival Advanced Micro Devices.

June Hearing

During a four-day hearing scheduled for June in Luxembourg, Intel executives will argue that the EC, the antitrust arm of the European Union, failed to prove that the giant chip maker unlawfully hindered AMD’s abilities to do business, and that the fine – the largest ever levied by the commission – was “manifestly disproportionate” with other fines levied by the EC.

According to Reuters, the fine represented 4.15 percent of Intel’s 2008 revenues.

The $1.45 billion fine, which was levied in May 2009, followed an eight-year investigation by the EC, and was among a number of investigations by regulators in the United States and elsewhere into Intel’s business practices and accusations that it used its dominant market presence and financial power to persuade OEMs, including Dell and Hewlett-Packard, to limit their use of AMD processors. The result was an environment where prices were kept unnecessarily high, innovation stunted and competition thwarted, harming consumers, the EC said.

According to EC officials, this was done through the use of rebates and direct payments to the systems makers.

Intel officials denied the allegations and promised to appeal. They argued that while the company was aggressive in its marketing and sales, those practices were not illegal or anti-competitive.

Intel found an ally in the EC’s ombudsman, who in November 2009 criticised the commission for improperly recording a meeting with a Dell executive during the course of its investigation. The ombudsman accused the European regulators of “maladministration.”

The EC disagreed with the ombudsman’s findings.

Other Probes

The European regulators’ investigation was one of a number of probes at the time into Intel’s business practices, with similar accusations of payoffs to OEMs to limit their use of products from AMD, as well as from graphics chip maker Nvidia. The US Federal Trade Commission (FTC) also accused Intel of altering some of its technologies to hamper the performance of products from AMD and other vendors.

Intel and the various regulators and rivals settled the legal disputes, though Intel executives remained firm that they had not violated any laws. Intel and AMD in November 2009 settled their lawsuits, with Intel paying AMD $1.25 billion (£772m) and agreeing to a set of business practice provisions.

In August 2010, Intel and the FTC settled their lawsuit, with the two sides agreeing that Intel could not use its market dominance and money to hamper competition. In addition, the chip maker in February settled with the New York State Attorney General’s Office. The settlement included a $6.5 million (£4m) payment from Intel to cover some of the government’s costs related to the litigation.