Intel slapped with record $1.45 billion fine in antitrust case

CEO slams European Commission ruling stating that the company takes 'strong exception' to the decision and will appeal

  • E-Mail
By  Vineetha Menon Published  May 13, 2009

The European Commission has slapped Intel with a record $1.45 billion fine, the highest ever imposed on an individual company, for violating antitrust rules and indulging in practices that hinder fair competition.

Speculation surrounding the decision reached a crescendo over the last few days with many predicting that Intel would face a harsh fine for its anti-competitive practices over the years. From October 2002 till December 2007, Intel used its dominant market position to offer wholly or partially hidden rebates to computer manufacturers on the condition that they bought all, or almost all, of their x86 CPUs from the company.

They also made direct payments to a ‘major retailer’ for stocking only computers with Intel CPUs. The Commission added that it “does not object to the rebates in themselves but to the conditions that Intel attached to those rebates.”

Additionally, Intel paid manufacturers to halt or delay the launch of specific AMD products and the sales channels made available to them.

"Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years. Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated," competition commissioner Neelie Kroes said in an official statement, adding that they would closely monitor Intel’s compliance with this decision.

Paul Otellini, Intel’s president and CEO, has lashed out in response to the recent ruling stating that the company will appeal.

“Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace…There has been absolutely zero harm to consumers. Intel will appeal,” an official statement from Otellini reads.

“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,” he added.

Intel’s $1.45 billion fine is the largest imposed on any individual company, exceeding even the 2004 EU ruling against Microsoft which involved a $655 million fine. While it might seem like a hefty price to pay, it does reflect the current worth of the global x86 CPU market which amounts to $30 billion per year, with Europe accounting for nearly 30%.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code