EU Fine for Intel Could Rebound in U.S.

Intel faces EU antitrust fine

American antitrust regulators have not been as aggressive as their European counterparts — just ask Microsoft — but if the reports that the EU is about to slap Intel with a fine for anti-competitive behavior are true, it could make Intel’s defense against AMD in the U.S. more of an uphill climb.

Reuters on Sunday reported that antitrust regulators at the European Commission could announce on Wednesday that they intend to fine Intel (NASDAQ: INTC) for engaging in illegal activities designed to slow down or cancel products from OEMs using processors from AMD (NYSE: AMD).

The EC will also order Intel to make changes to its business practices for what the EU executive sees as “naked restrictions” to competition, according to Reuters.

This includes claims that Intel gave rebates to computer makers to sell only machines with Intel CPUs and restrict or eliminate the use of AMD chips in their PCs. The second finding claims Intel paid PC makers to delay or scrap the launch of products containing AMD chips.

These activities reportedly took place as far back as 2001, when Craig Barrett was CEO. Barrett, now winding down his tenure as Intel’s chairman, has long been viewed by semiconductor analysts as having been very aggressive against AMD during his time as CEO.

He has since been succeeded by Paul Otellini, who took over the top executive post in 2005 in time to begin bearing the brunt of rivals’ and regulators’ antitrust complaints.

Early that year, Japan’s Fair Trade Commission found Intel had engaged in anticompetitive behavior toward AMD and forced the company to change its business practices.

AMD filed its own U.S. antitrust lawsuit against Intel in mid-2005, though the case is not schedule to go to court until 2010.

Now the EU is about to weigh in, making Intel’s position before the U.S. antitrust courts a whole lot weaker, one analyst said.

“There’s been so much data collected on so many continents, there has to be some value to that all,” Jim McGregor, senior analyst with In-Stat, told “There were complaints from OEMs about Intel activities. Intel has been at some points heavy-handed in its pricing and how it leverages its position. So many government entities have looked at this, it’s hard to say there’s still a question about it.”

For its part, Intel said it has not heard anything from the EC. “We have had no notification by anyone in authority that a decision has been made. So as far as we’re concerned, that is speculation at this stage and we won’t comment,” said Intel legal spokesman Chuck Mulloy.

The issue is sure to be raised on Tuesday, when Intel hosts what might have been an otherwise uneventful an investor’s day at its Santa Clara campus.

McGregor said he was pretty much expecting a fine to come from the EC, especially after the findings in Japan.

“It’s clear the way that they’ve done some of their marketing rebates or marketing budgets have been a source of contention for some time,” he said. “I don’t think they are doing anything other companies have done in the high tech industry, but if you are a dominant player you’re under the microscope.”

That said, he does think Intel was overly aggressive.

“Absolutely. I’m not saying others haven’t done it, but when you start putting limits on competitors through that, then it’s a problem.”

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