Intel Could Face Fines for Unfair Pricing Model
News broke earlier this week that Intel could be facing sizable fines from the European Union in relation to the company’s pricing model.
Reuters this week reports that the European Commission, which has said Intel’s pricing practices were an attempt to drive AMD out of the market, is set to rule on whether or not the company should be fined. 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.
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.
However, while fines are never pleasant, especially during times when money is tight, the maximum fine would be 10 percent of Intel’s annual revenue. The Reuters report contains something which would cause worse pains for Intel: the possibility that the European Union could impose new rules in order to remedy Intel’s actions. Former Commission official Michael Tscherny hinted at just that and said the European Commission could destroy Intel’s pricing model.
"Will the Commission impose something that would destroy their pricing model, open up the market to competition and new entrants or to AMD? That is what they would be worried about, more than their reputation or anything else," said Tscherny.
Read more on Reuters.