Intel May Face Billions In EU Fines

Intel is expected to be charged with anti-competitive behavior by the European Union sometime this week, and the chip giant could face an enormous fine for stifling competition in European computer markets, the Financial Times is reporting.

Advanced Micro Devices brought up the case against Intel in 2000, alleging that Intel was trying to unfairly shut out AMD from the market. Reportedly, Intel had offered rebates to manufacturers that buy the bulk of their processors from Intel and has paid manufacturers to delay or cancel product lines with chips from AMD.

The maximum fine the EU can levy against Intel is said to be 10 percent of its annual worldwide revenue—or almost $4 billion (£2.6bn) —though the maximum penalty is rarely applied.

In a 2004 case against Microsoft, which was accused of market domination, the EU fined Microsoft $655 (£428m) million.

“My expectation is that they’ll levy a rather large fine and use that to send a message,” John Spooner, an analyst with Technology Business Research, told eWEEK.

The EU is not the only government that’s noticed Intel’s strong-handing methods. In 2005, Japan’s Fair Trade Commission ruled that Intel had abused its chip monopoly. And in South Korea, the Fair Trade Commission fined Intel $21 million in June 2008 for offering discounts to computer makers that would shut out AMD.

AMD also brought an anti-trust lawsuit against Intel in the United States in 2005, for practices that went beyond playing with “sharp elbows.”

“Whatever happens, Intel is going to appeal,” said Spooner. “They’re going to make as many motions as possible to have that ruling overturned.”

While Spooner predicts Intel will have to limit certain practices, “I don’t expect things to necessarily change right away,” he said.

Regarding the discounts, or rebates, to manufacturers, Spooner commented, “Intel will have to curtail that, or they’ll be forced to curtail that.”