Reference no: EM132992223

The European Commission and Intel

In May 2009, the European Commission announced that it had imposed a record €1.06 billion ($1.45 billion) fine on Intel for anticompetitive behavior. This fine was the result of an investigation into Intel's competitive conduct during the period from October 2002 to December 2007. During this period, Intel's market share of microprocessor sales to personal computer manufacturers consistently exceeded 70 percent. According to the commission, Intel illegally used its market power to ensure that its major rival, AMD, was at a competitive disadvantage, thereby harming "millions of European consumers."

The commission charged that Intel granted major rebates to PC manufacturers-including Acer, Dell, Hewlett-Packard, Lenovo, and NEC-on the condition that they purchased all or almost all their supplies from Intel. Intel also made payments to some manufacturers in exchange for them postponing, canceling, or putting restrictions on the introduction or distribution of AMD-based products. Intel also apparently made payments to Media Saturn Holdings, the owner of Media Markt chain of superstores, for selling only Intel-based computers in Germany, Belgium, and other countries.

Under the order, Intel had to change its practices immediately, pending any appeal. The company was also required to write down a bank guarantee for the fine, although that guarantee is held in a bank until the appeal process is exhausted.

For its part, Intel immediately appealed the ruling. The company insisted that it had never coerced computer makers and retailers with inducements and maintained that it had never paid to stop AMD products from reaching the market in Europe. Although Intel acknowledges that it did offer rebates, it claimed that they were never conditional on specific actions by manufacturers and retailers aimed to limit AMD. In June 2014, an EU court rejected Intel's appeal and upheld the judgment against the company.

Sources: M. Hachman, "EU Hits Intel with $1.45 Billion Fine for Antitrust Violations," PCMAG.com, May 13, 2009; J. Kanter, "Europe Fines Intel $1.45 Billion in Antitrust Case," The New York Times, May 14, 2009; T. Fairless, "EU Court Upholds Record Fine against Intel," The Wall Street Journal, June 12, 2014.

Do you think the European Commission's findings and fine related to Intel were valid?

What are the future implications of non-U.S. Commissions (such as the European Commission) related to U.S. companies wanting to do business in other parts of the world?