European Commission Files Complaint Against Intel

Published: August 1, 2007

by Alex Woodie

The battle between Intel and Advanced Micro Devices reached new heights last week when the European Commission filed formal charges against Intel for allegedly using unfair business practices to hurt its smaller rival.

The EC, in a formal complaint called a Statement of Objections, alleges that Intel gave computer makers "substantial rebates" to buy most of their x86 chips from Intel. The European Union's antitrust body also accused Intel of outright paying computer makers to delay or kill the launch of computers with AMD chips, and also of selling server chips at below cost to large customers, governments, and universities.

Intel, the world's largest chip manufacturer, and AMD, its chief rival, are no strangers in a court of law. AMD has filed numerous lawsuits against Intel in the U.S. over the past few years. The EC has also been investigating Intel's conduct in the European computer market since 2002, when AMD and another chipmaker, VIA Technologies, complained about Intel's practices. VIA eventually backed out of the complaint, but AMD pursued the case and eventually submitted evidence that allegedly showed that Intel coerced the biggest consumer electronics chain in Europe, Media Markt, from dropping computers with AMD chips.

An Intel spokesman denied the allegations. "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, Intel's senior vice president and general counsel, in a statement posted to its Web site. "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.

An AMD spokesman applauded the EC's move. "Consumers know today that their welfare has been sacrificed in the illegal interest of preserving monopoly profits," said Thomas McCoy, AMD's executive vice president of legal affairs and its chief administrative officer. "Intel has circled the globe with a pattern of conduct, including direct payments, in order to enforce full and partial boycotts of AMD. The EU action obviously suggests that Intel has, once again, been unable to justify its illegal conduct."

Intel has 10 weeks to reply to the Statement of Objections, after which the company has a right to an oral hearing. Eventually, if the Statement of Objections is proved to be true, then the EC has the authority to restrict Intel's business and impose fines.

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