May 13, 2009

EC levels record $1.4B fine against Intel

The European Commission Wednesday fined Intel a record $1.4 billion, saying the U.S. firm abused its dominance in the computer chip field to curb competition.

Neelie Kroes, EU competition commissioner in Brussels, said the penalty was justified against Intel because the world's largest chip maker skewed competition and denied consumers any choice, The New York Times reported.

Intel used illegal anti-competitive practices to exclude its only competitor and reduce consumers' choice -- and the whole story is about consumers, Kroes said, adding that actions by the world's largest chip-maker undermined innovation.

Kroes said Intel had a strategy aimed mainly at excluding Advanced Micro Devices by paying computer makers and retailers to postpone, cancel or avoid the rival's products entirely, the Times reported.

She ordered Intel to stop offering rebates to computer makers, a practice that helped Intel maintain its 80-percent market share and blocked AMD from increasing its 20-percent market share.

Giuliano Meroni, president of Advanced Micro Devices's European operations, said the decision would shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers.

Intel officials did not have an immediate comment, but antitrust experts told the Times the company was certain to would appeal both the fine and orders to change its business practices.