Intel cops $1.9bn fine for antitrust action against AMD

Intel has been handed a massive €1.06 billion (A$1.9bn) fine for taking anti-competitive action against AMD.

The European Commission passed down its judgement overnight and justified the record fine because Intel had, in the words of EU competition commissioner Neelie Kroes, “used illegal anti-competitive practices to exclude its only competitor and reduce consumers’ choice – and the whole story is about consumers. ”

Kroes also said that by abusing its dominance to stifle PC makers choosing AMD processors, Intel’s practices had “undermined innovation.”

The eight year investigation found that Intel gave hidden rebates to PC manufacturers to buy Intel chips, along with payments to ensure a retailer would sell only Intel-based PCs. Acer, Dell, Hewlett-Packard, Lenovo and NEC were all named as companies which had accepted these rebates and payments.

Kroes described how Intel structured its pricing policy so that silicon which only Intel could supply was offered with a large rebate, but that rebate was conducive on choosing Intel over AMD where any such choice was available.

“A computer manufacturer which opted to buy AMD CPUs (instead of Intel CPUs) would consequently lose the rebate, or a large part of it, that Intel provided (for components) which the computer manufacturer had no choice but to buy from Intel.”

“The computer manufacturer would therefore have to pay Intel a higher price for each of the units supplied for which the computer manufacturer had no alternative but to buy from Intel.”

“In addition,” said Kroes, “there is evidence that Intel had sought to conceal the conditions associated with its payments”.

Intel was also found to have paid PC manufacturers to either delay or halt the launch of products built on AMD silicon or to limit their availability to the market. One case cited described an unnamed company being paid by Intel to postpone the launch of an first AMD-based business desktop by six months, along with selling such systems only to small and medium enterprises via direct distribution channels.

AMD European president Giuliano Meroni applauded the decision, describing Intel as “an abusive monopolist” and saying the EU ruling would “shift the power (from Intel) to computer makers, retailers and above all PC consumers.”

Intel CEO Paul Otellini said the company would appeal the EU ruling. “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’s fine is more than twice that imposed on Microsoft in March 2004 along similar antitrust grounds.