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Intel facing a large fine in European antitrust case

Intel facing a large fine in European antitrust case
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First Published: Fri, May 01 2009. 12 52 AM IST
Updated: Fri, May 01 2009. 12 52 AM IST
Brussels, Belgium: European antitrust regulators, which have been aggressively pursuing what they see as anti-competitive practices among technology companies, could impose their largest fine ever in a market-dominance case against chip maker Intel Corp.
The size of the penalty will be discussed by representatives from 27 European Union (EU) governments in early May. The decision would follow landmark rulings by the European Commission against Microsoft Corp., which also is being investigated over its Internet Explorer browser, and a settlement with International Business Machines Corp., which is again the subject of a complaint.
The commission began investigating Intel in 2000 after Advanced Micro Devices Inc. (AMD), its arch rival, filed a complaint. Both chip makers are based in the US.
In two sets of charges, in 2007 and 2008, the commission accused Intel of abusing its dominant position in computer chips by giving large rebates to computer makers, by paying computer makers to delay or cancel product lines and by offering chips for powerful server computers at prices below cost.
Intel has said that it has done nothing wrong and that European officials have investigated the case in a way that imperils its rights of defence. “Overall, Intel’s conduct is lawful, pro-competitive and beneficial to consumers,” Robert Manetta, an Intel spokesman in London, said on Wednesday.
Microsoft, the world’s largest software company, has faced the biggest financial penalties to date for abusing its dominance. It paid a fine in 2004 of €497 million, or Rs3,295 crore at current exchange rates.
In the Intel case, “I’d be surprised if the fine isn’t as high or higher than in the Microsoft case,” said Howard Cartlidge, the head of EU and competition group at the law firm Olswang in London. “Technology markets are where the European Commission has perceived particular problems due to dominant companies.”
Some legal experts speculate that Intel’s fine could reach about €1 billion. Intel’s annual sales were $37.6 billion in 2008.
European regulators have also fined Microsoft €279 million and €899 million for failing to comply with EU orders in antitrust cases, but these were administrative penalties.
Market researcher International Data Corp. says Intel had 81.9% of the global market for personal computer chips in December, against 17.7% for AMD. The commission can fine companies up to 10% of their global worldwide sales for antitrust abuses. But applying the formula strictly could put companies out of business rather than lead them to change their business practices.
A person with knowledge of the deliberations said the commission was planning to highlight specific instances of suspected illegal discounting and order an end to those practices.
©2009/THE NEW YORK TIMES
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First Published: Fri, May 01 2009. 12 52 AM IST