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Raids May Signal Trouble For Intel's EU Case

Investigators for the European Union antitrust office on Tuesday conducted a series of surprise raids at Intel offices in Germany and at the offices of three European computer retailers as part of its ongoing investigation into the chipmaker's business practices.

EU officials visited Intel's offices in Munich as well as the offices of Media Markt, a German retailer, DSG International Plc in England and PPR SA in France.

The world's biggest chipmaker is currently facing formal EU charges for allegedly offering below-cost customer rebates and pricing that the EU claims undercut rival AMD and discouraged manufacturers from building PCs with its chips.

In 2006, AMD claimed Intel had struck a deal with Media Markt to ensure the German company would not sell PCs embedded with AMD chips.

In July, the European Commission charged that Intel unlawfully wrested sales away from AMD, "its main rival," in the more than $30 billion microprocessor market.

AMD officials told regulators that Intel offers rebates to stifle competition. Intel will respond to the claims at a hearing next month.

In an statement e-mailed to InternetNews.com, Intel spokesman Chuck Mulloy confirmed the raids.

"As is our normal practice we are cooperating with the investigators," he wrote. "Since investigations of this nature are confidential we will not discuss what they were looking for nor will we speculate on the motivation of the EC," he wrote.

[cob:Related_Articles]The commission launched its probe in 2005 after a complaint was filed by AMD. Intel has also been under investigation in the U.S., Japan and Korea.

Last September, Korean officials raided the Intel office in Seoul and the Japanese equivalent of the FTC found the company committed anti-competitive practices.

AMD spokesman Drew Prairie said from AMD's perspective, "it's an important escalation of the Commission's investigation into Intel's business practices and their harm to consumers."

The complaint was filed in 2005 and AMD has seen its fortunes change since then, making significant gains before losing ground in the past year due to its own problems.

Prairie said that changes nothing.

"Intel's illegal business practices haven't changed," he said. "That's why the EU has an open investigation and Intel continues to be under scrutiny."

"What's at the core is whether Intel's business practices are illegal and harming customers, and the fortunes of the two companies don't impact that," he added.

Semiconductor analyst Dean McCarron of Mercury Research said he didn't think the EU would raid the offices if it didn't have a solid case.

"The reason you do this is because you are looking for more information, the proverbial smoking gun," he told InternetNews.com. "Without access to contracts and information related to negotiations, they might not have the evidence they would necessarily need."

Jim McGregor, senior analyst with In-Stat, thinks this is more than sour grapes on the part of AMD.

"Intel has been a very competitive company," he said. "You can say they were overly zealous, or maybe protecting their turf. It's hard to judge."

"The Japanese FTC [finding] sound something's wrong," he added. "The EU is looking into it. There have been complaints by OEMs. So there are some issues out there."