Week in review: EU slams Intel with record fine

Intel was fined more than 1 billion euros by the European Commission for violating antitrust legislation, following a lengthy investigation prompted by complaints made by chipmaking rival Advanced Micro Devices.

The world's chip giant was fined 1.06 billion euros ($1.45 billion) for engaging in illegal anticompetitive practices to exclude competitors from the market for computer chips called x86 central processing units (CPUs), the Commission said.

Between October 2002 and December 2007, Intel held more than 70 percent of the worldwide x86 CPU market. The Commission found that during the period in question, Intel engaged in two illegal practices. The first was that it gave wholly or partially hidden rebates to computer manufacturers on the condition that they buy all or almost all of their x86 CPUs from Intel.

Intel CEO Paul Otellini responded aggressively to the conclusions attached to the fine and said the company will appeal the ruling. Otellini cited the Commission's determination of the chipmaker "granting conditional rebates, where the conditions just weren't just volume-based but allegations about exclusive dealings or in one case exclusivity on retail shelves."

"Intel strongly disagrees with this decision. We do not have those kinds of conditions in our contracts. Our contracts are straightforward. They're consistent worldwide and they're volume-based: the more you buy, the less you pay," he said.

Answering a question about how will this affect Intel business practices, Otellini said he hasn't seen the 500-page document yet. "The two-and-a-half page summary released to us did not include what the specific remedies they're asking for are," he said.

However, don't expect the EU's antitrust enforcement decision to radically change what you see when it's time to buy your next PC. Antitrust actions can have a dramatic effect when a decision breaks a company into pieces, but the biggest factors in the rivalry between Intel and AMD--and increasingly Nvidia, too--is technology. So while AMD can be pleased with the European Commission's conclusion, it's got bigger worries.

When it comes to taking on Intel, a far bigger factor has been technology--not just processor designs, but also manufacturing skill and capacity--that means chips can be priced competitively while still being profitable.

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