Reports: EU closer to antitrust charges against Intel

Advisers urge EU to pursue legal action

Paul Meller    

 

January 17, 2007 (IDG News Service) -- BRUSSELS  -- Formal antitrust charges against Intel Corp. in Europe are coming closer, after officials working on the case advised European Union Competition Commissioner Neelie Kroes to push ahead with legal action, according to reports.

The European Commission spokesman for competition, Jonathan Todd, declined to comment on the reports, which have appeared in the Wall Street Journal and in Reuters reports. "We have an ongoing case against Intel. I can't say any more than that," he said.

The commission is the EU's regulatory and executive body.

The reports said a decision to send Intel a so-called statement of objections could be made at any time, although Kroes is understood to be proceeding cautiously.

Intel's spokesman in Brussels, Chuck Mulloy, wasn’t immediately available to comment.

The commission has been examining Intel's behavior in the European chip market for more than six years. Rival chip maker Advanced Micro Devices Inc. complained to the European regulator in 2000 that Intel, which has market share of around 80%, was pressuring computer manufacturers to remain loyal to its products by offering them rebates.

AMD maintains this is a coercive tactic that distorts competition, said Tom McCoy, the company’s executive vice president for legal affairs, in an interview last year. The commission has hesitated to take action because these rebates help reduce the price of chips to the end user. However, the regulator must weigh this benefit against the long-term cost of potentially allowing one competitor to corner the market for a product that is essential for all computers.

If the commission issues a statement of objections, then Intel will have to reply to the charges in writing. It would then be given the opportunity to present its arguments in a closed-door hearing with the commission and rivals.

The process can take years, but if the regulator concludes that Intel has abused its dominant position in the market, the chip maker could be fined an amount equal to as much as 10% of its global annual sales.

In 2005, Japanese competition officials declared that Intel's rebate schemes are illegal. Intel is appealing that finding.

In the U.S., AMD filed an antitrust case against Intel in federal court in Delaware. That case is still pending. South Korea is also investigating Intel's practices.