Report : EU to fine Intel over antitrust suit

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The European Commission is set to fine the largest chip maker, Intel, on Wednesday over breaking antitrust rules within the European Union, people familiar with the case told both the Wall Street Journal and Reuters over the weekend.

Officials, according to the Wall Street Journal, spent most of Friday on discussing the fine against Intel with competition authorities within the Union, as they have also a say on the matter. The fine is likely to be presented to the commissioners on Wednesday, when they are likely to adopt it.

The antitrust case made by the commission, the executive arm of the European Union, against Intel is based on evidence that Intel illegally paid computer manufacturers to postpone or even cancel the launch of their products containing chips produced by their main rival, Advanced Micro Devices (AMD).

The case started in 2000 when AMD filled a complaint against Intel after its access into the competitive market. The EU then sent preliminary charges seven years later, in 2007, and also added more charges later last year after it was alleged that Intel paid a major retailer to keep computers with AMD chips inside off the shelves.

Sources told Reuters that Intel set percentages on manufacturers of its own chips that PC makers must use, like NEC was told that 80 percent of its desktops and notebooks were to have Intel chips, while the 20 percent would be able to use AMD chips.

Lenovo was set to use Intel chips for all of its notebooks, as did Dell. HP business desktops were said to also have been limited to 95 percent Intel chips and the 5 percent could use AMD chips.

In total, there is certainty that Intel will be fined as the Brussels-based Commission will be looking at all violations made by Intel over the eight years that they have been investigating.

The sources, however, have no indication over how big the fine might be. The largest fine made by the European Commission for abusing their dominance over the market was 497 million euros (US$655 million) to Microsoft on March 24, 2004. However, the largest fine given out to the European Commission was given to Microsoft for US$1.16 billion after it failed to comply with the aforementioned ruling.

The competition commissioner, who is currently Neelie Kroes, can fine a company as much as 10 percent of its annual revenue, which is almost $38 billion when we use its 2008 results.

Image from: Josh Bancroft/Flickr (CC)