The Competition Commission confirmed on Friday that it had sent a Statement of Objections to Intel outlining the Commission’s view that Intel has infringed the EC Treaty rules on abuse of a dominant position with the aim of excluding its main rival, AMD, from the x85 CPU market.
According to the statement, the methods used by Intel to prevent AMD from expanding its market share were providing rebates to OEMs on the condition they got all or most of their CPUs from Intel; paying OEMs to delay or cancel AMD-based product lines; and offering strategic server makers CPUs at below cost.
Each of them is provisionally considered to constitute an abuse of a dominant position in its own right. However, the Commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anti-competitive strategy, noted the Commission.
Intel issued a statement in response in which it did not deny the conduct, but insisted that its actions had been in the interests of European consumers. We are confident that the microprocessor market segment is functioning normally and that Intel’s conduct has been lawful, pro-competitive, and beneficial to consumers, said Bruce Sewell, senior vice president and general counsel. While we would certainly have preferred to avoid the cost and inconvenience of establishing that our competitive conduct in Europe has been lawful, the Commission’s decision to issue a Statement of Objections means that at last Intel will have the opportunity to hear and respond to the allegations made by our primary competitor.
If it is found to have breached European antitrust rules, Intel could face a fine of up to 10% of its annual global revenues. That could be as much as $3.5bn based on revenue of $35.4bn in fiscal 2006.
The company has 10 weeks to respond to the Statement of Objections in writing and also has a right to an oral hearing before the Commission decides whether it has breached antitrust rules.
The European Commission opened its investigation into Intel’s business practices in 2001 and expanded its case last year after including details of AMD’s private antitrust suit.
While that case was restricted by the judge to Intel’s practices in the US, AMD’s claims about Intel’s allegedly illegal business practices in Europe were picked up by the Competition Commission.
Intel’s offices across Europe were raided in July 2005 following a complaint from AMD that 38 OEMs of PCs, laptops, and servers, as well as parts distributors, had been convinced by threats and the withholding of rebates to shun AMD’s chips.
In March 2005, the Japanese Fair Trade Commission ruled that Intel’s business practices over the previous couple of years had been anti-competitive, prompting Intel to amend its business practices.
