European Commission Fines Intel $1.45 Billion for Abuse of Dominant Position; Orders Intel to Cease Illegal Practices

As a result of Intel's rebates, the ability of rival manufacturers to compete and innovate was impaired, and this led to reduced choice for consumers. Rebates such as those applied by Intel are recognised in many jurisdictions around the world as anti-competitive and unlawful because the effect in practice is to deny consumers a choice of products.

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 Commission obtained proof of the existence of many of the conditions found to be illegal in the antitrust decision even though they were not made explicit in Intel’s contracts. Such proof is based on a broad range of contemporaneous evidence such as e-mails obtained inter alia from unannounced on-site inspections, in responses to formal requests for information and in a number of formal statements made to the Commission by the other companies concerned. In addition, there is evidence that Intel had sought to conceal the conditions associated with its payments.

x86 CPUs are the main hardware component of a computer. The decision contains a broad range of contemporaneous evidence that shows that AMD, essentially Intel's only competitor in the market, was generally perceived, by computer manufacturers and by Intel itself, to have improved its product range, to be a viable competitor, and to be a growing competitive threat. The decision finds that Intel's practices did not constitute competition on the merits of the respective Intel and AMD products, but rather were part of a strategy designed to exploit Intel's existing entrenched position in the market.

Intel’s worldwide turnover in 2007 was 27.972 million euros (US$ 38.834 million). The fine in this case takes account of the duration and gravity of the infringement. In accordance with the Commission's 2006 Guidelines on Fines the fine has been calculated on the basis of the value of Intel's x86 CPU sales in the European Economic Area (EEA). The duration of the infringement established in the decision is five years and three months.

The Commission’s investigation followed complaints from AMD in 2000, 2003 and 2006 (the last having been sent to the German competition authority and subsequently examined by the European Commission). The Commission's decision follows a Statement of Objections sent in July 2007, a Supplementary Statement of Objections sent in July 2008 and a letter sent to Intel in December 2008 setting out additional factual elements relevant to the final decision. Intel's rights of defence have been fully respected in this case.



Contact:

Delegation of the European Commission to the United States
Press Contacts:
Anthony Smallwood
(202) 862-9523
or
Kasper Zeuthen
(202) 862-9530



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