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EU exec slaps record antitrust fine on Intel ( $1.45 billion)

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May 13, 2009 5:49:42 PM

INSTANT VIEW: EU exec slaps record antitrust fine on Intel
Wed May 13, 2009 12:31pm EDT

(Reuters) - The European Commission fined chipmaker Intel a record 1.06 billion euros ($1.45 billion) on Wednesday and ordered it to stop giving computer firms illegal rebates to squeeze rival AMD out of the market.

The fine is the biggest ever imposed on a company by the European Union's executive arm for abuse of market dominance, surpassing the 497 million euro penalty levied on Microsoft in March 2004.

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KEY POINTS:

* EU fines Intel record 1.06 billion euros ($1.45 billion)

* Orders immediate halt to illegal practices

* Says Intel practices hurt "millions of European consumers"

* Fine is 4.15 percent of Intel's 2008 sales

* Intel has three months to pay fine

* EU says Intel paid computer makers to halt or delay products with rival chips

* EU says Intel paid major retailer to exclude computers with chips made by rival

COMMENTARY:

ROBERT JAKOBSEN, JYSKE BANK

"It means nothing strategically. It is only a financial fine, not changing the way Intel is operating today."

GIULIANO MERONI, PRESIDENT OF AMD EMEA

"Today's decision of the European Commission is historic, and it is a game changer for the global IT industry."

PRANAB SARMAH, ANALYST, DAIWA INSTITUTE OF RESEARCH

"Intel will either have to take a profit margin cut or raise prices, which will hurt either themselves or the customer if they do raise prices. They've got a big share of the market right now, and it's difficult for me to see how anyone can break that."

"Some say AMD may increase their market share as a result, but I'm not so sure about that. AMD doesn't have suitable technology for a range of notebook PCs, and it might be difficult for them to pick up any slack that Intel is leaving."

DAVID ANDERSON, LAWYER, BERWIN LEIGHTON PAISNER:

"Despite its strong defense, Intel is facing a wall of regulatory resistance to its business practices around the world with antitrust infringement decisions against it now in Japan, Korea, the EU, and the U.S. authorities are investigating Intel as well."

"It is a major decision that shows the Commission is serious about curtailing abusive behavior of dominant companies, especially in the high-tech sector."

"The Commission is trying to ensure that dominant companies don't foreclose the market to competitors, lock in customers and shut down innovation. They are not seeking to favor any one technology or platform, but they want to keep the markets open to competition and innovation, which will ultimately benefit consumers."

NATHAN BROOKWOOD, ANALYST, INSIGHT 64:

"The ruling is hugely important. AMD has been out there for the last five or six years screaming that Intel has been keeping them from getting free access to markets."

"If Intel's marketing practices are precluded in Europe that could have some impact on the competitive dynamics for AMD in Europe and it might have some spillover in terms of what happens in the U.S."

"It certainly could lead to AMD gaining more market share than it has been able to gain to date. On the other hand Intel right now has a very strong product line and it could be that even if Intel didn't engage in these practices, AMD still might face hurdles in gaining market share because of Intel product advantages. On the other hand, AMD has recently come out with some exciting new products, and they could claim that hey, you know, we've got great products and the only thing standing between us and more market share is Intel's heavy hand."

ANDY NG, ANALYST, MORNINGSTAR:

"Intel's competitive advantage is not that they cheated or anything like that. It's that they are much larger than their smaller rival AMD. As far as long-term competitive advantage, Intel still has it."

"Over the long run, Intel still has the upper hand in the industry."

http://www.reuters.com/article.../idUSTRE54C1TF20090513
May 13, 2009 7:40:11 PM

Google will be on the line. Wait to see -that- fine. Anyway, since there has been no "harm to the consumers", I think this fine is pointless unless the cash goes to AMD - and it won't -, so...
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