RealTime IT News

EC Levies Antitrust Charges at Intel

The European Commission (EC) preliminarily charged Intel, the world's largest chipmaker, today with antitrust behavior toward rival AMD, accusations that Intel was quick to deny.

According to the EC, the Santa Clara, Calif.-based Intel conditioned rebates to original equipment manufacturers (OEM) on the OEM's buying most of their chips from Intel and, in a number of instances, made direct payments to OEMs to either delay or cancel the launch of a new product line featuring AMD chips.

In addition, the EC said Intel offered below-market prices on server chips in hopes of undermining AMD bids.

"These three types of conduct are aimed at excluding AMD…from the market. Each of them is provisionally considered to constitute an abuse of a dominant position in its own right," the EC said in a statement. "However, the commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anti-competitive strategy.

Intel noted the case is based on complaints from a direct competitor rather than customers or consumers.

"We are confident that the microprocessor market segment is functioning normally and that Intel's conduct has been lawful, pro-competitive and beneficial to consumers," Bruce Sewell, Intel's senior vice president and general counsel, said in a statement.

Intel has 10 weeks to reply to the complaint. If the EC decides the preliminary complaint is valid, it may require Intel to cease the antitrust practices and impose a fine.

"While we would certainly have preferred to avoid the cost and inconvenience of establishing that our competitive conduct in Europe has been lawful, the commission's decision…means at last Intel will have the opportunity to hear and to respond to the allegations made by our primary competitor," Sewell said.

AMD, the Sunnyvale, Calif.-based archrival of Intel, said in a statement the EC charges suggest that Intel is engaging in monopolistic behavior.

"Consumers know today that their welfare has been sacrificed in the illegal interest of preserving monopoly profits. Intel has circled the globe with a pattern of conduct, including direct payments, in order to enforce full and partial boycotts of AMD," said Thomas M. McCoy, AMD executive vice president for legal affairs and chief administrative officer.

In 2005, Japan's Fair Trade Commission ruled Intel was in violation of the country's antitrust laws when it attempted to force full or partial exclusivity for Intel chips with five Japanese PC makers. South Korea currently has an active investigation underway about Intel's business practices.

Also in 2005, EC regulators raided several of Intel's European offices as part of ongoing investigation of Intel. The raids came in the wake of an AMD antitrust complaint against Intel in the U.S. courts.

In the U.S. case, AMD accuses Intel of unlawfully establishing a monopoly in the x86 microprocessor market by shunting customers away from AMD. The lawsuit claims Intel paid Dell and Toshiba not to do business with AMD and paid Sony for an exclusive contract.

AMD also claims Intel forced NEC, Acer and Fujitsu into partial exclusivity agreements by offering rebates to those who agreed to limit or forgo AMD purchases. The chipmaker also said Intel paid NEC several million dollars for caps on NEC's purchases from AMD.