US chipmaker Intel yesterday (11 June) lost its challenge against a record €1.06 billion fine handed down by European Union antitrust regulators five years ago, for blocking rival Advanced Micro Devices (AMD).
The European Commission in its 2009 decision (here) said Intel tried to thwart AMD by giving rebates to PC makers Dell, Hewlett-Packard Co, NEC and Lenovo for buying most of their computer chips from Intel. The EU competition authority said Intel also paid German chain Media Saturn Holding to stock only computers with its chips.
Judges at the Luxembourg-based General Court backed the Commission’s decision.
“The Commission demonstrated to the requisite legal standard that 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,” the court said.
Judges said the EU watchdog had not been heavy-handed with the level of the fine, equal to 4.15% of Intel’s 2008 turnover, versus a possible maximum of 10%. While Commission penalties rarely hit the top figure, the rising level of fines is a source of worry for many companies.
“The General Court considers that none of the arguments raised by Intel supports the conclusion that the fine imposed is disproportionate. On the contrary, it must be considered that fine is appropriate in the light of the facts of the case,” judges said.
Intel can take its case further to the Court of Justice of the European Union but only on points of law. The case is T-286/09, Intel vs Commission.
The European Commission welcomed the decision and said, “The judgment is significant because it confirms that the Commission was fully justified in pursuing the anticompetitive conduct in question in a major worldwide market.”
The European Consumer Organisation (BEUC) was an official party to the complaint. Monique Goyens, BEUC director general said, “When large companies abuse their dominance of the market, it causes direct harm to consumers. The Court’s ruling issued a strong reminder that such behaviour is illegal and unacceptable.
“Antitrust actions can help clean the market and this record fine should serve as an expensive deterrent against companies abusing oversized market shares. The extent of the fine should not pull the wool over peoples’ eyes, consumers harmed by Intel’s long-lasting misconduct were left out of any compensation.”
Chip-driven processors are at the heart of every computer, and their increase in processing power has been a precondition for the rise in productivity in the ICT sector in recent decades. The market is characterised by fierce competition between two major players: Intel and its sole remaining competitor of note AMD, which holds a much smaller market share.
Following complaints by AMD about its rival's alleged anticompetitive behaviour, the European Commission raided Intel offices across Europe, invading the premises of a number of computer manufacturers at the same time.
In July 2007, the Commission sent a statement of objections to the US company confirming that it was investigating suspected incestuous practices between Intel and computer manufacturers. The move was followed by a second statement of objections in July 2008 (EurActiv 18/07/08).