European Commission Charges Intel

By Nathan Statz

July 30, 2007: The European Commission (EC) has charged Intel with antitrust violations spawned from abusing its dominant position in the global market.

The charges allege that Intel has provided cash payments to Original Equipment Manufacturers (OEM’s) to delay or even cancel the launch of products using its main competitor, AMD’s processors.

Also alleged is the provision of substantial rebates to OEM’s conditional to them sourcing a vast percentage, if not all of their processors from Intel. This makes it extremely challenging for competing OEM’s offering AMD based products as they face higher cost margins. To add to this pressure, Intel was allegedly offering CPU’s well below cost price to further push out AMD vendors.

EC investigations have been underway for more then six years, with the charges being the result of the long term probe into Intel’s business practices. “Consumers know their welfare has been sacrificed in the illegal interest of preserving monopoly profits” said Thomas M. McCoy, AMD executive vice president legal affairs.

This is the latest in a long string of antitrust tussles that Intel and AMD have been involved in. AMD has brought its own legal proceedings against Intel in the US and Japan.

In June AMD filed proceedings in U.S. District Court in Delaware, alleging that Intel had paid Dell and Toshiba not to do business with AMD as well as paying Sony for an exclusive contract.

The 2005 Japan case ruled that Intel was indeed engaging in anti-competitive practices. "You don't have to take our word for it when it comes to Intel's abuses; the Japanese government condemned Intel for its exclusionary and illegal misconduct," McCoy said.

Intel has 10 weeks to reply to the charges, and face a major fine and an order to cease anti-competitive practices if the charges hold up.

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