EU files new competition charges against Intel

BRUSSELS Thu Jul 17, 2008 4:46pm EDT

BRUSSELS (Reuters) - European Union antitrust regulators made new accusations against chipmaker Intel Corp (INTC.O) on Thursday, saying it paid retailers not to sell PCs using chips made by rival Advanced Micro Devices Inc (AMD.N).

The "statement of objections" from the European Commission follows 2007 charges that Intel, the world's biggest microchip producer, gave computer makers rebates to limit their use of AMD chips or avoid them altogether.

The expansion of the accusation means the Commission is now weighing charges that Intel illegally fiddled with both the wholesale and retail channels in an effort to suppress its competitor.

"The Commission also considers at this stage of its analysis that all the types of conduct reinforce each other and are part of a single overall anti-competitive strategy aimed at excluding AMD or limiting its access to the market," the EU's executive body said in a statement.

A Commission statement said Intel had provided substantial rebates to a leading European personal computer retailer, conditioned on it selling only Intel-based PCs.

Secondly, the Commission said Intel paid a PC maker to delay the planned launch of a product line incorporating an AMD-based central processing unit (CPU), the chip at the heart of every PC.

Thirdly, it gave the same computer maker substantial rebates to encourage it to get all its CPUs for laptops from Intel, the Commission said.

Intel lawyer Steve Rodgers told Reuters he was disappointed by the new charges, which centered on whether it was lawful or not to issue price discounts.

"The result will be higher computer prices because it prevents Intel from offering discounts," he said. "Offering discounts is central to competition and good for consumers."

Intel has its logo on four-fifths of the CPUs that run the world's 1 billion PCs, while AMD accounts for the rest.

The Commission could fine Intel, though any penalty would be unlikely to approach a cap of 10 percent of annual turnover. It could possibly damage the firm's reputation by labeling the company an unfair competitor.

Rodgers said Intel had been given eight weeks to respond to the charges, and would study them in detail before responding to the Commission in writing.

The EU executive in mid-2007 publicly alleged three kinds of violations by Intel, including providing CPU chips to strategic customers such as governments and educational institutions below cost.

Intel has said repeatedly that it did nothing wrong.

In June, South Korean authorities fined Intel about $26 million, finding it had offered rebates to South Korean PC makers including Samsung Electronics Co Ltd (005930.KS) and Trigem Computer in return for not buying AMD microprocessors.

One day after the South Korean finding, the U.S. Federal Trade Commission launched its own formal probe.

The state of New York is also investigating Intel.

In Japan, the Fair Trade Commission concluded in 2005 that Intel had violated that country's Antimonopoly Act. Intel disagreed with the findings but accepted that commission's recommendation, a move that allowed it to avoid a trial.

(Editing by Gerald E. McCormick and Braden Reddall)

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