Anti-competitive practices are punished hard in times of crises, as witnessed by California-based company Intel. The leading chip-manufacturer was fined an unprecedented 1.06 billion Euro by the Commission which said it had abused its dominant market position between 2002 and 2007 by acting to shut out its only competitor, Advanced Micro Devices (AMD,) in an unjust and unlawful way. The EU’s Competition Commissioner, Neelie Kroes, has proved herself a steely woman, taking on international giants and she said Intel shouldn’t have been surprised by the record high amount of the fine because she said it had been calculatingly cold in trying to monopolise an industry on which the world’s information systems depend. Exceeding the previous record fine of 899 million Euro fine levied on Microsoft last year, the fine imposed on Intel is the highest ever leveled against a single company in an EU anti-trust case or for any reason. Intel CEO Paul Otellini said the company will appeal the decision.

“Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace – characterised by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal.” AMD, however, said it had developed products that were as good as or better than Intel’s, but never had a chance to gain a foothold in the market because of what it said were the unfair tactics used against it. The almost 10-year long investigation included gathering of a broad range of evidence through statements from companies, on-site inspections, and formal requests for information and finally has uncovered a serious ill-treatment in the x86 chip market area.

Between the years 2002 and 2007, Intel Corporation had been abusing the EU antitrust rules, Kroes ruled. Holding a principal share of at least 70 percent in the worldwide x86 CPU market, Intel has been found to misuse its position to exclude its competitors in through unlawful more or less hidden loyalty rebates and by paying manufacturers and retailers to restrict the commercialisation of rivals’ products. “Intel went beyond normal price competition by giving rebates to computer manufacturers on the condition that they bought all, or almost all, of their central processing units (CPUs), a key hardware component of every computer, from Intel,” explained Kroes. Manufacturers involved in unfair partnerships were companies Acer, Dell, HP, Lenovo and NEC as well as retailer Media Saturn Holding, the parent company of Media Markt. They are considered “‘victims’ of Intel’s unfair practices and are will not be subjected to any sanctions,” said Kroes.

On the basis of discounts offered, computer producers were forced to accept “preference” clauses preventing them from signing contracts with a competing AMD. According to the Commission, Intel kept on providing a major retailer Media Markt with direct payments on condition they will stock only Intel CPU-equipped computers. Intel’s “{pay-for-delay” policy aimed to stop or postpone the launch of rival’s new products and to limit their distribution once available. The Commission said it has specific, documented examples, of Intel paying other manufacturers to, for example, delay the launch of an AMD-based PC by six months, and to restrict the sales of AMD-based products to certain customers.Rebates that normally do not present a threat to market competitiveness but lower prices for consumer instead, turned to be harmful in case of Intel.

 The main reservations are connected with the conditions tied to rebates in order to restrain AMD’s marketability. Intel’s only rival AMD was perceived a threat by Intel as mentioned in its own internal documents seen by the Commission. As a consequence of what were said to be Intel’s unjust practices, the pace of innovation and consumer welfare came under the threat. Innovation being the central word repeatedly taken out in various policy fields as a path that can lead us out of the economic crisis, the Commission’s decision and fine imposed seems to be highly symbolical and Kroes seemed to be laying down the law that nobody will jeopardise competition.

EU consumers groups were predictably happy, even if American business groups said the EU was going after US companies with a vengeance. “Consumer choice is the heartbeat of a competitive economy. Intel have been shown to have denied effective consumer choice and as a result kept prices artificially high and slowed the pace of innovation. Such a large fine should deter companies that might think they will get away with such anti-competitive and anti-consumer practices,” said Monique Goyens, director-general of Brussels- based European consumers’ organisation BEUC.