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EU turns down Intel's appeal for $1.4B fine

Posted: 16 Jun 2014     Print Version  Bookmark and Share

Keywords:Intel  Dell  Lenovo  Hewlett-Packard  NEC 

A European court has declined Intel's appeal of a 2009 antitrust case in which it charged a $1.43 billion fine against Intel, its largest fine ever in an anti-competition case. The company can still appeal the decision to Europe's highest court, the European Court of Justice, according to The New York Times. Intel did not immediately comment on a statement from the General Court of the European Union, which rejected the appeal June 12.

The original case concluded in May 2009 that Intel made payments to computer makers Dell, Lenovo, Hewlett-Packard and NEC on the condition that they purchased from Intel all or almost all of their x86 CPUs. In addition, Intel gave European PC retailer Media-Saturn payments for exclusively selling PCs using Intel processors, the court indicated.

The original case also found Intel paid Acer, HP and Lenovo to postpone or cancel the launch of AMD CPU-based products or to put restrictions on how the AMD-based PCs were distributed.

The US government also conducted separate investigations against Intel and Microsoft for similar practices. AMD sparked both the US and European cases against Intel. Intel settled its case in the US.

At the time of the original cases, some OEMs told EE Times at least some of the payments came as part of joint marketing agreements broadly used by Intel and Microsoft. The payments would often be substantial and come just before quarterly earnings, making them more attractive to PC makers operating on razor-thin profits, one HP source told EE Times.

In a 2013 interview a former Intel executive described how some of those payment programs got their start with deals between Intel and IBM.

Intel argued on several points in its European appeal that the fine should be eliminated or reduced.

The European court rejected Intel's argument that the court needed to prove on a case-by-case basis that the so-called rebates hurt competition. It pointed in part to Intel's 70 per cent or larger share of the x86 processor market.

In its statement, the European court detailed reasons it denied Intel's arguments. For example, it said: Exclusivity rebates granted by an undertaking in a dominant position are, by their very nature, capable of restricting competition and foreclosing competitors from the market. It is thus not necessary to show that they are capable of restricting competition on a case by case basis.

Intel attempted to conceal the anti-competitive nature of its practices and implemented a long term comprehensive strategy to foreclose AMD from the strategically most important sales channels.

Regarding the fine it said: The fine is appropriate in the light of the facts of the case... the Commission set the proportion of the value of sales at five per cent, which is at the lower end of the scale, which can go up to 30 per cent. Moreover, the fine is equivalent to 4.15 per cent of Intel's annual turnover, which is well below the 10 per cent ceiling provided for.

- Rick Merritt
  EE Times

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