EU Ombudsman Slaps Regulators Over Intel Case

The European Ombudsman rebuked European Union regulators on Wednesday for procedural errors in their antitrust probe of Intel (NYSE: INTC) but the censure will not affect a 1.06 billion euro ($1.58 billion) fine against the U.S. chipmaker.

The European Commission levied the record fine in May for illegally shutting out rival AMD. The ombudsman’s decision is non-binding but it could help the world’s No. 1 chipmaker in its appeal against the ruling to Europe’s second-highest court.

While the European Ombudsman can only make recommendations, he is one of the few independent checks on the Commission’s antitrust agency, which critics say acts as judge, jury and prosecutor against companies. In his report, Ombudsman P. Nikiforos Diamandouros said he “found maladministration on the grounds that the Commission failed to make a proper note of a meeting with computer manufacturer Dell relating to the Intel investigation.”

He did not make any finding as to whether the EU executive had infringed Intel’s rights of defense.

The ombudsman also did not make a finding of maladministration over Intel’s second allegation that the Commission had encouraged Dell to enter into an information exchange agreement with AMD (NYSE: AMD).

The Commission said it did not agree with the ombudsman’s finding that it should have prepared a formal note on the meeting and said it had given Intel the chance to comment on the non-confidential version of the internal note.

“Such internal notes are normally not accessible since they also reflect the Commission’s investigative strategy which parties do not have a right to access,” the EU executive said in a statement.

“Intel’s rights of defense were fully respected throughout the procedure.”

Intel said the ombudsman’s decision validated its charges.

“Intel has consistently said that [the Directorate General for Competition] ignored evidence that was potentially exculpatory for Intel and that it was selective in its use of other evidence,” the company said in a statement.

The ombudsman’s confidential decision was sent to the Commission and Intel in July this year, before Wednesday’s non-confidential decision was released following consultation with Intel, Dell (NASDAQ: DELL) and AMD, the ombudsman said.