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EU Accuses Countries of Intel Bias

Four European countries stand accused of breaking strict public procurement rules and adopting an excusive "Intel Inside" policy, regulators said Tuesday.

France, the Netherlands, Finland and Sweden received letters, the European Commission said, accusing them individually of purchasing only Intel-based computers and ignoring the EC's mandated open bid process.

This is not the first time that the EU has sent letters asking about Intel's influence in the world. Officials send out a batch of similar complaints in April 2004, following reports that Austria, Belgium, Finland, France, Germany, Italy, and the Netherlands were cutting exclusive deals.

The Commission said it based its latest argument on three variations of an Intel bias: requirements to supply Intel microprocessors, "Intel or equivalent" microprocessors, or microprocessors using a specific clock rate.

"Reference to a specific brand would constitute a violation of Directive 93/36/EEC on public supply contracts," the EC said in its complaint. "Merely specifying a clock rate is not sufficient for assessing the performance of a computer."

According to the EC complaint, local authorities in France solicited as many as a dozen bids for Intel-only microcomputers, servers or workstations. The government in Amsterdam similarly requested bids on computers, notebooks and monitors along with services that used "Intel or equivalent" microprocessors.

Further north, the EC found the Universities of Jyvaskyla and Tampere and Hame Polytechnic in Finland also solicited bids requiring Intel chips. In Sweden, the Municipality of Filipstad and Chalmers University of Technology had three separate contracts suggesting that the equipment supplied must be fitted with Intel Pentium microprocessors. The national police authority allegedly had a similar contract for laptops with Intel Centrinos inside. The Uppsala regional authority also acquired computers that had to have a certain clock speed that at the time only Intel could supply, the EC said.

The countries named in the complaint now have two months to reply to the accusations or face criminal charges.

EC spokesperson Anthony Gooch confirmed that the letters were sent to national officials but declined to comment on whether the new round of investigations was motivated by a ruling by a U.S. federal judge last week.

U.S. District Judge James Ware denied a request by AMD that Intel turn over internal documents so that AMD could forward the documents to the European Commission. The request came as part of a long-running legal battle between the two companies. AMD accuses Intel of abusing its position and violating anti-competitive rules around the world.

Intel executives were not available for comment.

Intel's position is strong, with 80 percent of the market for chips that run PCs and 90 percent of the revenue share worldwide. By contrast, AMD has about 16.8 percent of the market and barely registers in the double digits in worldwide revenue share. Taiwan-based Via Technologies and Transmeta round out the top four.

According to documents in the U.S. District Court dispute between AMD and Intel, "Intel Inside" and other "market development fund" programs as loyalty rebates to secure the agreement of PC makers and retailers to only sell Intel-based PCs. The chipmaker also accused Intel of withholding its technology as a coercion tactic and of forming private, standard-setting cartels that exclude AMD and its interests.

But in his summary opinion, Judge Ware noted that AMD's requests were actually "unwanted and unlikely to be reviewed" by the EC. The judge also noted that the EC itself had the power all along to ask Intel for the documents but has yet to do so.