Court confirms Intels record-breaking 1.06 billion fine

Intel logoIn a ruling issued Thursday, the European Unions General Court rejected Intels appeal of a 1.06 billion ($1.44 billion) penalty for antitrust violations. Instead, the EU General Court upheld the record-breaking penalty against the US computer chip giant, which had been issued in 2009 by the EU Commission.

Intel had been seeking annulment of the large penalty for what the EU Commission previously ruled to have been the company's antitrust infringement actions.

But the General Court determined that Intel, the predominant player in the computer microchip marketholding a market share of roughly 70 percent or morehad acted anticompetitively in attempting to squeeze out AMD, its main rival, between 2002 and 2007.

Specifically, the Court explained that Intel paid bribes to a large German retail chain called Media-Saturn, so that it only stocked computers with Intel chips, rather than those using AMDs microprocessors. This, the Court argued, constituted clear antitrust abuse. The General Court finds that those payments were capable of making access to the mark more difficult for AMD, and that Intel strategically chose this approach to achieve such an effect.

The Court explained that the exclusivity rebates Intel granted to Dell, HP, NEC and Lenovo are, when applied by an undertaking in a dominant position, incompatible with the objective of undistorted competition within the common market. The Court found such exclusivity rebates, in light of Intels market dominance, by their very nature, capable of restricting competition and foreclosing competitors from the market.

While Intel appealed the EU decision on the grounds that the fine was disproportionate, the General Court found that the penalty was reasonable in light of the facts at hand. The General Court explained that the EU Commission penalty, which amounted to approximately 4.15 percent of the companys annual turnover in 2008, could have legally been as large as 10 percent.

The judgment is significant because it confirms that the Commission was fully justified in pursuing the anticompetitive conduct in question in a major worldwide market, the EU Commission responded in a statement issued Thursday.

We are disappointed in this outcome," Intel Spokesman Chuck Mulloy told Ars on Thursday. We have said all along that we believe the EC erred in many areas. After weve studied the decision, we will evaluate our options and decide what to do next.

Mulloy also noted that the company retains the option to appeal the decision to the EUs highest court, the European Court of Justice, within seventy days of the present ruling. He further explained that the computer chip giant paid the fine in full back in 2009, claiming that, as a result, there is no material financial impact on our business due to todays ruling.

Source: Ars Technica

Tags: CPUs, Intel, legal action

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