By Robin Wauters
The European Commission Wednesday announced that it has fined Intel (INTC) a record €1.06 billion ($1.45 billion) for abusing its dominance in the market for computer chips to exclude its biggest (and frankly, the only serious) rival AMD by paying computer manufacturers Acer, Dell (DELL), HP (HPQ), Lenovo, and NEC as well as retailers to postpone, cancel or downright avoid using or selling the latter’s products.
That’s one hell of a fine, considering the previous record for similar abuses in the EU was ‘only’ €497 million (Microsoft, back in 2004).
The European Commission has ordered Intel to stop the exclusion practices immediately, and said it would closely and actively monitor Intel’s compliance with its decision. EU regulators first began investigating Intel in 2001, after AMD filed a complaint in Brussels the year before.
The commission estimates the world market in the specific chip set in question (x86 CPUs) to be worth about €22 billion a year, with Europe accounting for approximately 30% of that (€6.6 billion). Intel currently maintains a share of about 80 percent of the European market.
Intel has not commented yet, but the general expectation is that the company will appeal both the fine and orders to change its business practices to the European Court of First Instance.
Paul Otellini, Intel Corporation president and CEO just issued the following statement:
“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.”