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Intel to Face EU Fine on Wednesday

By - Source: Tom's Hardware US | B 39 comments

The European Union is expected to impose heavy fines on chip maker, Intel this week, according to reports.

Early in March we reported that Intel could be facing fines from the European Union in relation to the company’s pricing model. It seems the European Union has a big problem with the way Intel has been doing business, in particular rebates to computer makers and retailers. The European Commission said Intel’s pricing practices were an attempt to drive AMD out of the market and was set to rule on whether or not the company should be fined.

Citing people familiar with the matter, the Wall Street Journal said the EU on Wednesday will fine the world's biggest computer-chip maker for breaking antitrust rules. WSJ reports that once all the stakeholders have had their say on the fine, the final document will be presented to the college of commissioners Wednesday, which is then likely to adopt it.

As we reported last week, the EU can impose of up to 10 percent of a company’s annual revenue. Intel’s revenue for 2008 was $38 billion, however, legal experts told the New York Times that Intel’s fine could reach roughly €1 billion, or $1.3 billion.

It’s not yet clear as to whether or not the European Commission will impose new rules in order to remedy Intel's actions. Former Commission official Michael Tscherny hinted at just that last month when he spoke to Reuters and said the European Commission could destroy Intel’s pricing model.

We’ll keep you posted on this one, and update on Wednesday or as soon as anything develops.

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  • 1 Hide
    rcarm , May 11, 2009 12:53 PM
    Is the EU gonna give AMD some of that money?
  • 1 Hide
    randomizer , May 11, 2009 1:12 PM
    rcarmIs the EU gonna give AMD some of that money?

    Na, this is part of their "stimulus package". AMD will have to sue Intel themselves to get a cut.
  • -4 Hide
    soky602 , May 11, 2009 1:16 PM
    Not sure if I understand totally, but does that mean Intel aren't allowed to sell their chips cheap to make us happy?
  • -4 Hide
    spazoid , May 11, 2009 1:31 PM
    "The European Commission said Intel’s pricing practices were an attempt to drive AMD out of the market"

    Welcome to the free market! Or not. I will never be able to understand why any non-private organisation can hand out fines or other penalties to private companies for being competitive.

    Intel wants to make money. They'll make more money if AMD goes bankrupt. The consumer doesn't win, but the market does.

    There is no such thing as a regulated free market. EU, you have to pick which you desire the most.
  • 2 Hide
    sandmanwn , May 11, 2009 1:48 PM
    Seems silly that EU courts are involved in a spat between two US based companies, especially handing out fines.

    They should make a ruling but enforce no penalties. The ruling should do nothing more than give AMD the opportunity to file a claim for compensation.

    The EU benefiting looks like nothing more than government sticking its hand in the US cookie jar.
  • 4 Hide
    blackened144 , May 11, 2009 1:49 PM
    If the EU was giving this money directly to the company that was affected, then I wouldnt have much of a problem with it. The problem I have with this is that the EU is going to fine them $1.3b and keep it for the EU. They dont care one iota about "illegal rebates", this is purely a grab for money. Also how come we dont hear anything about the retailers who accepted these "illegal rebates"? Could it be because they are European companys whose pockets are not too deep?
  • -1 Hide
    apache_lives , May 11, 2009 1:51 PM
    get over it EU
  • 5 Hide
    erdinger , May 11, 2009 2:04 PM
    Dear Americans, Amd is not a American company. The main seat of Amd is in Germany Dresden, where a big factury is also seated. (or was)

    This makes the whole thing a Euro-American topic. Since the American company Intel acted illegaly, damaging an European Company (Amd), and thereby neglected European law, they have to pay for it.

    Some of the money already reached Amd because Amd got money from the German state.

    So please don't complain about Europe taking away American money, because it's an American company which tries to outcompete a European company with illegal actions!





  • 2 Hide
    sublifer , May 11, 2009 2:12 PM
    soky602Not sure if I understand totally, but does that mean Intel aren't allowed to sell their chips cheap to make us happy?

    No, Intel was effectively paying the retailers and manufacturers to buy and use their processors. Most of that would not have been passed on to the customers although there's a chance it could have.
  • 2 Hide
    zaratustra06 , May 11, 2009 2:15 PM
    No market is completly free and should not be completly free. That is why all countries have anti-mopolistic laws.
  • 2 Hide
    Anonymous , May 11, 2009 2:18 PM
    To those saying that the fine is for having low prices, this is not true. The fine is for unfair business practices. A couple examples of things they were doing: Paying companies like HP and Dell money to push Intel chips, keep low stock of AMD, and don't get in the latest model. They also did this sort of thing with OEMs like newegg and such .. but in the EU. They would pay the company a bunch of money to be Intel exclusive, or have the staff push their chips and talk trash about the competition.
  • 0 Hide
    sandmanwn , May 11, 2009 2:18 PM
    ErdingerDear Americans, Amd is not a American company. The main seat of Amd is in Germany Dresden, where a big factury is also seated.

    Not any more now that the FOUNDRYCOMPANY owns those fabs not AMD. I guess it should be a UAE/EU thing now huh? Fact is, its US owned.

    Some of these allegations date back to the 1990's before the EC was even founded and ratified.
  • 1 Hide
    blackened144 , May 11, 2009 2:23 PM
    ErdingerDear Americans, Amd is not a American company. The main seat of Amd is in Germany Dresden, where a big factury is also seated. (or was)This makes the whole thing a Euro-American topic. Since the American company Intel acted illegaly, damaging an European Company (Amd), and thereby neglected European law, they have to pay for it.Some of the money already reached Amd because Amd got money from the German state.So please don't complain about Europe taking away American money, because it's an American company which tries to outcompete a European company with illegal actions!

    I would agree with you, but the AMD website says the Global Headquarters is "One AMD Place" in Sunnyvale California. Also, your arguement that they are taking from an American company to benefit a European company is completely BUNK because not one cent of that money will be going to AMD. They ENTIRE fine is going directly into EU coffers.
  • 0 Hide
    blackened144 , May 11, 2009 2:26 PM
    Also, I just checked the AMD site and they have the site in 15 different languages. You would think that if their headquarters was in Germany that they would have a German language website, they dont. AMDs FAB36 is located in Dresden though.
  • 0 Hide
    erdinger , May 11, 2009 2:40 PM
    Sorry messed up the thing with the fab in dresden (thought it's the head quarters) ... my mistake

    Still Intel acted against European law in Europe so why shouldn't they pay for it?
  • 0 Hide
    Anonymous , May 11, 2009 2:42 PM
    "There is no such thing as a regulated free market. EU, you have to pick which you desire the most."

    Imagine all regulation is lifted and we have 100% free market. Next month you get $500 electric bill instead of regular $100 even your usage didn't go up. You call your electric company and they told you that they raised tariffs. You have only to options: 1. pay the bill 2. stop using electricity.
  • 0 Hide
    sandmanwn , May 11, 2009 3:24 PM
    ErdingerStill Intel acted against European law in Europe so why shouldn't they pay for it?

    They should get paid, but not to the EC or EU government. The action should be brought forth by AMD and the money should be distributed to AMD.
  • 2 Hide
    tayb , May 11, 2009 3:29 PM
    ErdingerDear Americans, Amd is not a American company. The main seat of Amd is in Germany Dresden, where a big factury is also seated. (or was)This makes the whole thing a Euro-American topic. Since the American company Intel acted illegaly, damaging an European Company (Amd), and thereby neglected European law, they have to pay for it.Some of the money already reached Amd because Amd got money from the German state.So please don't complain about Europe taking away American money, because it's an American company which tries to outcompete a European company with illegal actions!


    AMD was founded and their corporate head quarters are in America. They are an American company.
  • 0 Hide
    erdinger , May 11, 2009 3:33 PM
    Yes it would be nice if Amd would get the money I agree, but most important is that Intel pays and wont do the same actions again so that Amd has a big long term benefit!

  • -1 Hide
    falconqc , May 11, 2009 3:49 PM
    I don't see what's wrong with giving customers a rebate when buying your products bulk. It's not like Intel paid them not to use AMD chips, they just said "If you buy more from us, you get a bigger rebate." It's a valid way to reward customers for their loyalty to your company.

    Seems to me like the EU is being a greedy and whiny little carebears.
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