Intel to appeal €1 billion fine by EU

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Intel has been hit with a record 1 billion fine by the European Union (EU) for offering illegal rebates and payments to manufactures and retailers to encourage them to use its own products.

Competition commissioner Neelie Kroes said in a statement: "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."

The European Commission said Intel gave hidden rebates to PC makers that bought most or all of their chips from the firm. The EC said Intel also directly paid one major retailer to stock only computers featuring Intel chips cutting its main rival AMD out.

"Such rebates and payments effectively prevented customers - and ultimately consumers - from choosing alternative products," the EC said in a statement.

Intel was also accused of bribing manufacturers to cancel or hold off launches of computers featuring competitors' CPUs.

The other firms involved included Acer, Dell, HP, Lenovo and NEC, as well as retailer Media Saturn Holding, which owns the MediaMarkt stores. None have been accused of any illegal activity by the EU.

Intel will appeal

In response to the ruling, Intel president and chief executive Paul Otellini said in a statement sent to IT PRO that it disagreed with the decision and will appeal.

"Intel takes strong exception to this decision," he said. "We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal."

"We do not believe our practices violated European law. The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not," he said, adding that Intel will stop the rebates during the appeal.

Otellini accused the commission of ignoring evidence and "refusing to obtain" it. "We believe this evidence shows that when companies perform well the market rewards them, when they don't perform the market acts accordingly," he added.

The 1.06 billion fine is the biggest doled out yet by the competition commission. Microsoft was famously fined 497 million in 2004 by EU.