The European Commission has slapped a massive $1.45 billion fine on chip giant Intel for engaging in anti-competitive practices that harm consumers.
Competition Commissioner Neelie Kroes said Wednesday:
Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years. Such a serious and sustained violation of the EU’s antitrust rules cannot be tolerated.
In plain language, Intel can be considered a serial rapist for repeatedly harming consumers by its illegal, anti-competitive actions that ultimately lead to higher PC prices.
In 2008, the Korea Fair Trade Commission imposed a $25.4 million fine for abusive practices that led to higher PC prices for South Korean customers.
Three years earlier, the Japan Fair Trade Commission said Intel violated the country’s anti-competitive laws through illegal deals with five Japanese PC manufacturers.
In the U.S., the Federal Trade Commission and New York Attorney General’s Office are investigating Intel for alleged abuse of its monopoly position.
Violates EC Rules
Imposing the mega-fine, the EC said Intel violated EC Treaty antitrust rules on the abuse of a dominant market position (Article 82) by engaging in illegal anticompetitive practices to exclude competitors from the market for the x86 computer chips that are common in most PCs.
Ordering Intel to cease the illegal practices immediately to the extent that they are continuing, the EC said Intel engaged in two kinds of illegal activities:
* Intel gave wholly or partially hidden rebates to computer manufacturers on condition that they bought all, or almost all, their x86 CPUs from Intel. The U.S. chip company also made direct payments to a major retailer on condition it stock only computers with Intel x86 CPUs. Such rebates and payments prevented consumers from choosing alternative products.
* Intel made direct payments to computer manufacturers to halt or delay the launch of specific products containing competitorsâ€™ x86 CPUs and to limit the sales channels available to these products.
The EC investigated Intel after receiving complaints from Intel rival AMD in 2000, 2003 and 2006 (the last complaint was made to the German competition authority).
The global market for x86 CPUs is currently estimated at â‚¬22 billion ($30 billion) per year, with Europe accounting for approximately 30%.