Beijing Olympics: EU fines Intel record billion euros in new battle

EU antitrust regulators fined US chip giant Intel a record 1.06 billion euros 1.45 billion dollars on Wednesday, claiming it abused its stranglehold on the semiconductor market to crush its main rival.

The company hit back, saying it would fight the ruling with an appeal in EU courts, raising the spectre of a new antitrust saga between Brussels and a US technology giant after Microsoft's years of European legal battles.

The European Commission, Europe's top competition watchdog, accused Intel of using illegal loyalty rebates to squeeze rivals out of the market for central processing units CPUs -- the brains inside personal computers.

The Santa Clara, California-based company dominated the 22-billion-euro 30-billion-dollar market for the ubiquitous x86 CPUs with a 70-percent share during the more than five years it was accused of breaking EU antitrust rules.

"Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," EU Competition Commissioner Neelie Kroes said.

"Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated," she added.

The commission said Intel had used wholly or partially hidden rebates to get PC makers such as Acer, Dell, HP, Lenovo and NEC to buy all or almost all their CPU supplies from Intel instead of US rival Advanced Micro Devices AMD.

"Naturally, the commission favours strong, vigorous price competition, including by dominant firms," Kroes told reporters in Brussels.

"However, Intel went beyond normal price competition by giving rebates to computer manufacturers on the condition that they bought all, or almost all, of their CPUs from Intel."

Intel general counsel Bruce Sewell defended the rebates, arguing that computer makers approach the company seeking reductions and stressing that "there is no evidence that we were pricing below cost."

EU antitrust regulators also accused Intel of paying computer manufacturers to halt or put off the launch of products containing microchips competing with Intel's x86.

In addition, Intel allegedly paid a major electronic retailer, chain store MediaMarkt, to stock computers equipped with its chips.

The commission ordered Intel to cease any of the ongoing practices which it deemed to break EU rules.

Intel did not hesitate in challenging the commission's ruling.

"We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace," Intel president and chief executive Paul Otellini said.

"There has been absolutely zero harm to consumers. Intel will appeal," he said.

Intel's fine topped the previous record 899 million euros Microsoft was ordered to pay last year for failing to cooperate with the European Commission in its antitrust battles with the US software giant.

"Consumers have been paying too much for their computers and they should be compensated," BEUC director general Monique Goyens said, welcoming the commission's ruling.

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