European Commission imposes record € 1.06 billion antitrust fine on Intel

The European Commission yesterday fined Intel € 1.06 billion (around US$ 1.4 billion) for abuse of its dominant position in certain CPU computer chips (x86 CPUs) between 2002 and 2007. This exceeds the previous record fine for anticompetitive behavior of € 896 imposed last year on Saint Gobain for its participation in the car glass cartel as well as the fine of € 899 imposed last year on Microsoft for non-compliance with the Commission abuse decision.

The Commission made two findings of abuse against Intel:

• first that it granted hidden rebates to computer manufacturers on condition that they obtain all or almost all of their x86 chip requirements from Intel, and paid a major retailer (Media Markt) to stock only Intel-based computers; and
  
  
• second that it paid computer manufacturers to delay the launch of computers containing chips manufactured by its main competitor AMD.

These practices were found to undermine the ability of Intel's competitors to compete effectively and harm innovation. In line with its recently published Guidance Paper on abuse of dominance cases, the Commission assessed whether Intel's behavior would harm an 'as efficient' competitor (i.e. a competitor able to manufacture chips as cost efficiently as Intel) and has concluded that it would.

It appears that Intel had actively sought to conceal its infringement, among others by excluding the abusive terms from written contracts with computer manufacturers, and this - together with the fact that Intel's practices constitute well established infringements of EU law - may in part explain the scale of the fine.

The fine is equivalent of 4.15% of Intel's 2008 worldwide turnover. The maximum fine that the Commission can impose in antitrust cases is 10% of worldwide turnover.

Click for the Commission's press release and Q&A on the fine.