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May 13, 2009

EU Fines Intel Over Uncompetitive Practices in Chip Sales

Intel is fined a whopping $1.45 Billion for market practices the European Union considers anti-competitive.  Specifically, Intel used rebates for its processors with terms that made its customers either reject or restrict the use of AMD processors.  The lengthy opinion is not out yet, but summaries released by the EU are available.

From the EU Statement:

Intel awarded major computer manufacturers rebates on condition that they purchased all or almost all of their supplies, at least in certain defined segments, from Intel:

  • Intel gave rebates to computer manufacturer A from December 2002 to December 2005 conditional on this manufacturer purchasing exclusively Intel CPUs

  • Intel gave rebates to computer manufacturer B from November 2002 to May 2005 conditional on this manufacturer purchasing no less than 95% of its CPU needs for its business desktop computers from Intel (the remaining 5% that computer manufacturer B could purchase from rival chip maker AMD was then subject to further restrictive conditions set out below)
  • Intel gave rebates to computer manufacturer C from October 2002 to November 2005 conditional on this manufacturer purchasing no less than 80% of its CPU needs for its desktop and notebook computers from Intel
  • Intel gave rebates to computer manufacturer D in 2007 conditional on this manufacturer purchasing its CPU needs for its notebook computers exclusively from Intel.

Payments to prevent sales of specific rival products

Intel also interfered directly in the relations between computer manufacturers and AMD. Intel awarded computer manufacturers payments - unrelated to any particular purchases from Intel - on condition that these computer manufacturers postponed or cancelled the launch of specific AMD-based products and/or put restrictions on the distribution of specific AMD-based products. The Commission found that these payments had the potential effect of preventing products for which there was a consumer demand from coming to the market. The Commission found the following specific cases:

  • For the 5% of computer manufacturer B’s business that was not subject to the conditional rebate outlined above, Intel made further payments to computer manufacturer B provided that this manufacturer :

  • sold AMD-based business desktops only to small and medium enterprises
  • sold AMD-based business desktops only via direct distribution channels (as opposed to through distributors) and
  • postponed the launch of its first AMD-based business desktop in Europe by 6 months.
  • Intel made payments to computer manufacturer E provided that this manufacturer postponed the launch of an AMD-based notebook from September 2003 to January 2004.
  • Before the conditional rebate to computer manufacturer D outlined above, Intel made payments to this manufacturer provided that it postponed the launch of AMD-based notebooks from September 2006 to the end of 2006.


The statement is here, and comments from Neelie Kroes, European Commissioner for Competition Policy are here.  Intel denies the charges and a statement by Intel President and CEO Paul Otellini is here.

May 13, 2009 | Permalink

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