Intel fined a record €1bn for illegal business practices

By Nate Lanxon on 13 May 2009, 12:58pm

Intel has been smacked with a record fine of €1.06bn (£950m) by the European Union, for breaking EU competition law between 2002 and 2007 in an attempt to restrict its only real rival, AMD.

The chipmaker believed paying Dell, Acer, Lenovo, HP and NEC to delay or stop the launch of machines with its comparatively small competitor's chips inside, was fair play. The EU did not. And it also didn't believe giving manufacturers 'loyalty rebates' on the condition they bought almost all of their chips from Intel was okay either.

According to European Competition Commissioner Neelie Kroes, "In one case, a computer manufacturer took up only a small part of an offer by AMD of free CPUs because [it would have meant breaching] the conditions of its agreement with Intel, and to lose rebates on its numerous Intel purchases."

And at a time when the corporation is having to make cutbacks in its staffing and chip production, it's cost Intel almost a billion pictures of the Queen. That's an entire oodle of boodle right there, ladies and gents.

Intel and AMD respond to the news

Intel CEO Paul Otellini is, as will come as little surprise to only the most dense of readers, seriously miffed. "Intel takes strong exception to this decision. We believe the decision is wrong," he said in a statement. "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."

Giuliano Meroni, AMD's EMEA president, told CNET UK, "The EU decision will shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers.”

The record-breaking fine beats that handed to Microsoft last year for failing to comply with a previous anti-competitive ruling, which cost Redmond just under a billion euros. Although when added to the original fine of around half a billion euros, Microsoft's total bill comes to more than Intel's.

That won't be much comfort to Intel, mind, which will be appealing the EU's decision. This could go on for some time.