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Intel Facing Huge Fines from European Union

By - Source: Tom's Hardware US | B 33 comments

Those European Union Antitrust regulators are having a busy week, folks, and today reports suggest the EU could impose its biggest ever market-dominance related fine on Intel.

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.

The New York Times today reports that the size of that penalty is to be discussed by representatives from 27 European Union governments in early May. However, we wouldn’t be so jacked up about the money itself. Sure, it could be the EU’s biggest fine handed out ever, but previous reports suggest that the maximum fine allowed would be 10 percent of Intel’s revenue, which while unpleasant, wouldn’t exactly clean the company out. The New York Times cites legal experts as saying Intel’s fine could reach roughly €1 billion, or $1.3 billion. Intel’s annual sales were $37.6 billion in 2008. However, there is a distinct possibility that the EU could 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.

Intel denies charges related to rebates offered as long as manufacturers agreed to obtain the majority of their processors from Intel as well as paying them to either to delay or cancel the launch of AMD based products. The company maintains that its actions were within legal boundaries.

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Top Comments
  • 11 Hide
    FlayerSlayer , April 30, 2009 3:19 PM
    I used Intel from 386 to Pentium II, then used AMD for Athlon and Athlon64, and I recently went back to Intel for Core2Quad and Core i7. I like both companies, but go with whoever offers the better chip that generation.

    I just want them both to compete with their products, not underhanded business deals. Even if you hate AMD, their existance brings quality up and prices down for Intel chips.
Other Comments
  • 6 Hide
    simplyderp , April 30, 2009 2:55 PM
    Business as usual.
  • -4 Hide
    tenor77 , April 30, 2009 3:12 PM
    EU, I don't know where to begin.....
  • 11 Hide
    FlayerSlayer , April 30, 2009 3:19 PM
    I used Intel from 386 to Pentium II, then used AMD for Athlon and Athlon64, and I recently went back to Intel for Core2Quad and Core i7. I like both companies, but go with whoever offers the better chip that generation.

    I just want them both to compete with their products, not underhanded business deals. Even if you hate AMD, their existance brings quality up and prices down for Intel chips.
  • 1 Hide
    A Stoner , April 30, 2009 3:20 PM
    AMD did not get market share because people like me had already invested in Intel hardware and were not willing to make a full conversion of our computers. Companies did not buy AMD hardware, because companies typically look for products that have a long reputation of reliability, and pure power is great, but if it does not work, it is worse than worthless to them. The typical time period for large companies to evaluate a new product before implementing is between 18 months and 2 years. Thus, any compnay that already updated the year before would not even be close to ready to change until after that entire 3 year period of domination is over. That is why AMD did not take market share, along with Intel doing the right things in its sales, which is lower prices to match the compitition.
  • -9 Hide
    Anonymous , April 30, 2009 3:23 PM
    Those business practices are consistent with how the Torah states that descendants of the tribe of David may treat businesses owned by gentiles... It all depends on what "law" you're following...
  • -1 Hide
    BSMonitor , April 30, 2009 3:25 PM
    You think this is anything less than the EU robbing an American company for a billion dollars, think again...

    AMD gets nothing out of this except, I told you so..
  • -5 Hide
    A Stoner , April 30, 2009 3:26 PM
    One other thing. Companies that sell products learn this early on. If you are not selling what people are buying, it does not matter what the cost to make it was. Thus, if Dell was selling a product that people did not want to buy (Intel), they simply would have gone broke with a huge inventory of (Intel). AMD has to sell it's product, and that means convincing customers to buy it's products over Intel's. That is a PR thing, not a Dell thing. It is not Dell's job to convince customers to buy AMD's products. Dell's customers for the most part get to tell Dell what to build. Same goes for HP and every other computer seller.
  • 1 Hide
    Anonymous , April 30, 2009 3:36 PM
    Good Job!!!! Go the EU competition is good for all as long as the playing field is even.
  • 8 Hide
    garydale , April 30, 2009 3:41 PM
    Good for the EU. I've got nothing against Intel. Generally they've been good corporate citizens making decent products and releasing technical data & assisting with open source drivers for their hardware.

    However, anti-competitive / monopolistic business practises cannot be excused. Compete on the merits of your product, not on the size of your wallets.
  • 0 Hide
    roofus , April 30, 2009 4:03 PM
    BSMonitorYou think this is anything less than the EU robbing an American company for a billion dollars, think again...AMD gets nothing out of this except, I told you so..


    Smartest comment I have seen so far. AMD will get nothing but a "it should be ok now" out of the deal. IF...big IF Intel does pay the fines, the EU will absorb most if not all of it. This isn't about fairness to them. It is about money.
  • 5 Hide
    SpadeM , April 30, 2009 4:23 PM
    It's not about robbing the poor American corporation, the article say so:
    "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." so it's not about who's processor is bigger it's about the way Intel has been doing business with OEMs or big retailers, to favor their products instead of AMD. And if Intel is found guilty of such practices then you've got only Intel to blame for it's loss in profit.

    PS: I wonder if a European corporation would have done the same in the States, would the comments read: America is robbing an European company.

    Ignorance is bliss
  • -7 Hide
    jsloan , April 30, 2009 4:24 PM
    first microsoft, now intel, god dambed pinko communists.

    they first messed up the health sector and now the technology sector.

    we are going from healthcare for everyone to computers for everyone.

    socialist bastards, damb you all to hell. ;-)
  • 1 Hide
    falchard , April 30, 2009 4:40 PM
    I agree, Europe is floundering and now they are suing every major foriegn corporation. This is just a ploy to steal money for their bloated socialized governments.
  • 0 Hide
    Anonymous , April 30, 2009 4:47 PM
    Exactly roofus, don't know why anyone else hasn't talked about it. Where does the money from these 'fines' end up? Oh, that's right, into the EU's pocket, not the company that was most affected by the other companys practices. If it's true that Intel did underhanded business I think that some rectification should take place, with AMD getting the boost because they were screwed, not the EU.

    "Gif moneyz pl0x" ~EU
    "No, and for that, no more processors for you..." ~Intel
  • 0 Hide
    eddieroolz , April 30, 2009 4:55 PM
    Milk every cent out of American corporations, they say.
  • 1 Hide
    megamanx00 , April 30, 2009 5:44 PM
    Intel did use some foul practices in the old P4 days. I don't think they have those rebates to big OEMs now, but I do now that they use to hire reps, don't know through who but it wasn't actionlink, who would try and meet with the big chain stores as well as the local small shops to push Intel products. Didn't seem to do much more than hand out promo material, but that all seemed to stop around the time this anti competitive legal stuff started.
  • 0 Hide
    cerulean , April 30, 2009 6:15 PM
    I'm not sure how this really makes sense. Any fines collected by the EU from this suit won't be going straight into AMD's pockets, despite their claim that they are doing it due to unfair pricing models and business practices against AMD. The only thing this will trigger is a delay in price drops on Intel's part until they make up the difference. With their domination on the upper mid-high market, there is no competition (and unfortunately won't be for quite some time :(  ). It seems like a poor method to collect some extra cash to fund some other stupid government program.

    #!$% bureaucrats.
  • 0 Hide
    superblahman123 , April 30, 2009 7:02 PM
    It looks to me like the EU is just trying to call foul for the sake of drawing in revenue for themselves. I find it hard to believe that the EU is just "trying to keep everything fair" for AMD. Intel is just doing business, and they should be able to do business in any way they see fit as long as they aren't breaking any *WRITTEN* laws.

    Between them suing Intel and Microsoft, they seem to be very fine-happy.

    Thank god Wal-Mart stays in America, they'd be getting reemed in Europe.
  • 0 Hide
    Elsapo , April 30, 2009 7:28 PM
    So the prevailing opinion here is that, it is okay for a the bigger company to pay to have their competitions goods not reach market. Just clarifying because it seems that way to me.
  • 5 Hide
    Anonymous , April 30, 2009 7:37 PM
    If US had laws against stupid corporate greed, the economy wouldn't have crashed.

    Monopolies are bad. With the fines, EU only wants to keep intel from doing it again. At least it worked with Microsoft.
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