The European Commission for anti-competitive prices has fined Intel a record $1.45 billion, which smashes the previous record fine of 497million euros which was levied against Microsoft, in 2004. The Commission found that Intel illegally paid manufacturers (such as Dell, HP etc), and Media Saturn (which owns Europe’s biggest electronics retailer), to favour its chips, and thus squeeze any competition, out of the marketplace for CPU’s.
The investigation was sparked by complaints by AMD, who were the main victims of Intel’s anti-competitive strategies. Intel’s successful monopolistic strategies are reflected in the fact that, last year, Intel made 80.5% of microprocessors in computers, while AMD made only 12% of them. Additionally, Intel’s market value is $85 bn, while AMD’s market value is $2.6 bn.
Competition Commissioner, Neelie Kroes, said, “Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years,“. The Commission has ordered Intel to cease their illegal practices and has given them 3 months from the notification of the decision to pay up.
However, Intel is adamant that they have done nothing to violate the anti-trust rules, and will appeal against this verdict. Intel chief executive said, “Intel takes exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor market… There has been absolutely zero harm to consumers. Intel will appeal”.
Intel is likely to drag on the litigation process, as Microsoft did in 2004, but regardless, this whole case must be a huge blow for Intel. WE will just have to wait and see how things develop.