http://www.nytimes.com/2009/05/14/business...?flyingspaghettimonster=technologyIntel Fined Record $1.45 Billion in Antitrust Case
BRUSSELS — The European Commission on Wednesday fined Intel a record $1.45 billion (€1.06 billion) for abusing its dominance in the market for computer chips to exclude Advanced Micro Devices, which is Intel’s only serious rival.
The E.U. competition commissioner, Neelie Kroes, said the penalty against Intel, the world’s largest chip maker, was justified because the company had skewed competition and robbed consumers of choice.
Kroes said Intel “used illegal anticompetitive practices to exclude its only competitor and reduce consumers’ choice — and the whole story is about consumers. ” She added that Intel’s practices “undermined innovation.”
The previous record fine for similar abuses in the European Union was €497 million, or $677 million at current exchange rates, imposed on Microsoft in March 2004 for blocking competition in markets for server computers and media software.
Ms. Kroes said Intel had pursued a strategy aimed mainly at excluding AMD by paying computer makers and retailers to postpone, cancel or avoid AMD products entirely.
She also ordered Intel to cease offering rebates to computer makers that had helped it maintain a share of about 80 percent of the market for microchip sales and blocked AMD from increasing its share beyond about 20 percent of that market.
Giuliano Meroni, the president of AMD’s operations in Europe, said the decision would “shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers.”
Intel had no immediate comment, but antitrust experts have said Intel would almost certainly appeal both the fine and orders to change its business practices to the European Court of First Instance, which is the trade bloc’s second-highest tribunal.
On Tuesday, Intel’s chief executive Paul S. Otellini, declined to answer questions about the case in Europe ahead of any official announcement from regulators. “I prefer not to comment on a rumor,” Mr. Otellini said, speaking to investors gathered at the company’s headquarters in Santa Clara, California, for an annual meeting.
In typical fashion, Mr. Otellini vowed Intel would continue spending vast sums of money toward advancing its manufacturing lead over rivals. Intel has long embraced a strategy of keeping its research and development investments high during downturns as a means of applying more pressure on competitors when better times return.
Under the order, Intel must change its business practices immediately pending its appeal, although it could ask for an injunction. Intel also must pay the fine right away, though that sum would be held in a bank account until appeals are exhausted, a process that could take years.
The commission is entitled to levy fines up to 10 percent of a company’s annual global sales. Intel’s annual sales were $37.6 billion in 2008, thus the company could have faced a maximum penalty of close to $4 billion dollars. Money collected in antitrust cases is added to the trade bloc’s annual budget of around €130 billion.
The commission found that Intel “went to great lengths to cover up its anticompetitive actions,” Ms. Kroes said Wednesday, adding that her officials had uncovered “serious wrongdoing” in the chip market by Intel that had harmed millions of consumers.
The decision to impose severe punishment on Intel is another reminder of the emergence of European regulators as some of the world’s most activist enforcers of antitrust law, and it is a further sign authorities all over the world are raising the stakes for the biggest technology companies.
Last year, the U.S. Federal Trade Commission stepped up its inquiries into Intel, opening a formal investigation.
This week, the head of the U.S. Justice Department's antitrust division, Christine A. Varney, made clear that authorities would return to an aggressive enforcement policy against corporations that abuse their market dominance, following a lull under President George W. Bush.
While Bush was in office, many smaller companies chose to take their complaints to the E.U. regulators and to Asian authorities.
May 24 2008, 04:18 AM
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