EU issues new accusations against Intel

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The competition case against the leading global chipmaker Intel worsened yesterday when the European Commission made public additional allegations of abuse of dominant market position by the US giant, which is notably suspected of pursuing unfair practices against its main rival, AMD.

In the latest development in four-year long investigations into Intel, the Commission announced yesterday (17 July) that it had sent a second formal statement of objections to the California-based chipmaker based on suspicions that it has been violating competition rules in Europe.

Now Intel is publicly under enquiry for having “provided substantial rebates to a leading European personal computer retailer conditional on it selling only Intel-based PCs”. The Commission did not name the retailer. Raids were conducted last year in the offices of the main European electronic goods retailers, notably Media Markt, PPR and DSG International.

The fresh allegation comes on top of previous suspicions that Intel had paid computer manufacturers to incorporate its own processors in their products and delay the launch of PCs based on AMD processors.

The Commission also announced yesterday that it suspects that Intel paid a computer manufacturer in Europe to exclusively incorporate Intel’s processors into its PCs and laptops. Yet again, the Commission did not disclose the name of the PC maker.

Intel has now two months to reply to these allegations. If the responses are deemed insufficient, the Commission could oblige Intel to bring an end to its unfair practices in Europe and eventually fine the US company.

Intel reacted by promising to fully respond to the new statement of objections, “but it is clear that the allegations stem from the same set of complaints that our competitor, AMD, has been making to regulators and courts around the world for more than 10 years,” reads a statement issued by Intel after the Commission’s move.

Intel has been already fined in South Korea over some of the practices under investigation in Europe, notably for giving rebates to computer manufacturers for avoiding the use of AMD processors. Similar probes are ongoing in the US and have been carried out in Japan.

The note issued yesterday evening by the Commission reads that the EU executive "considers at this stage of its analysis that all the types of conduct reinforce each other and are part of a single overall anti-competitive strategy aimed at excluding AMD or limiting its access to the market".

Intel replied in a statement: "We are naturally disappointed that the Commission has decided to issue a new statement of objections. This suggests that the Commission supports AMD's position that Intel should be prevented from competing fairly and offering price discounts which have resulted in lower prices for consumers."

Monique Goyens, Director General of BEUC, the European consumers group, commented: "We are shocked by the reaction of Intel, who are trying to make us believe that its aggressive practices to reduce prices are in consumers' interests. On the contrary, the main effect of these practices is to drive rivals out of the market in the long term, to the detriment of consumers".

AMD executive vice president and legal affairs and chief administrative officer Tom McCoy commented: "The European Commission's latest charges, along with intense regulatory scrutiny in America and Asia of Intel's conduct, demonstrate that antitrust regulators worldwide are focused on protecting consumers. Intel has paid a leading retailer to turn away AMD-based computers from leading global computer manufacturers, which can only be regarded as robbing consumers of their fundamental right to choose."

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 Commission first raided Intel offices in Germany, Britain, Spain and Italy in July 2005. At the same time, the offices of a number of computer manufacturers were investigated (EURACTIV 13/07/05).

In July 2007, the Commission confirmed that it was investigating suspected incestuous practices between Intel and computer manufacturers which were allegedly being paid to include Intel processors in their PCs and delay or cancel the launch of products with AMD-embedded processors. Intel was also under investigation for keeping processor prices too low, with the alleged aim of hindering competition from AMD (EURACTIV 27/07/07).

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