Intel Facing Huge Fines from European Union

News
By Jane McEntegart
published

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.

Related Links

Tom's Hardware

Reuters

New York Times

Jane McEntegart
33 Comments Comment from the forums
  • simplyderp
    Business as usual.
    Reply
  • tenor77
    EU, I don't know where to begin.....
    Reply
  • FlayerSlayer
    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.
    Reply
  • A Stoner
    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.
    Reply
  • 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...
    Reply
  • BSMonitor
    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..
    Reply
  • A Stoner
    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.
    Reply
  • Good Job!!!! Go the EU competition is good for all as long as the playing field is even.
    Reply
  • garydale
    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.
    Reply
  • roofus
    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.
    Reply