May 11, 2009

EU Accuses Intel Of Abusing Market Dominance

Antitrust regulators from the European Union are expected to announce this week that Intel Corp illegally paid computer makers to postpone or delay the release of products containing chips from Intel competitors.

On Wednesday, the European Commission will order changes to Intel Corp's business practices for what the EU sees as "naked restrictions" to competition, said sources familiar to the case.

The EU is also expected to fine the corporation, although there has been no indication as to how large the fine may be.  In March 2004 the EU issued a $655 million fine to Microsoft Corp for an abuse of market dominance, the largest fine ever issued by the commission.

According to the sources, the European Commission is expected to announce that Intel abused its dominance of the computer processing unit market on two accounts.

Intel is accused of giving rebates to computer makers if they would eliminate or restrict the use of computer chips made by Advanced Micro Devices, Intel's rival. The company also gave incentives for retailers to only sell Intel powered machines.

Intel will be ordered by the European Commission to end the illegal rebates by a specific date, said the sources.

The Commission will also announce that Intel paid computer manufacturers to delay or cancel the release of AMD powered products. 

According to the sources, the violations have occurred over the last eight years.

In the first violation, Intel would tell companies, like NEC Corp, that 80 percent of its computers should have Intel chips and only 20 percent of its machines could have competitor chips, the sources told Reuters News.

Many products, such as Lenovo notebooks and many Dell products, only run on Intel chips, the sources added.

Neither Jonathan Todd, spokesman for the European Commission, nor Chuck Mulloy, spokesman for Intel, would comment on the situation.

In 2007, the EU officially charged Intel over illegal rebates to computer makers.  The firm was charged in July with paying retailers to limit the availability of computers using competitor chips.

Intel denies the claims.


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