EU : Commission brings case against Intel

Intel Corporation, sometimes said to have 80% of the world's computer chip market, has, to all intents and purposes, seen off market entrants such as Motorola and IBM in the Computer Central Processor (CPU) market.

It now has only one major rival - if a company that sells only 20% of Intel's volumes can be called a rival.

That other company is AMD.

Amongst many technically minded people, AMD is the supplier of choice - but for consumers and bulk buyers of PCs, the situation is bleak: the dominance of Intel is fuelled not by their wishes but by what motherboard manufacturers will produce and what PC manufacturers will specify.

AMD has cried "foul" saying that its products are often more advanced and cheaper than those from Intel, but that consumers and bulk buyers don't get the chance to find that out.

The European Commission doesn't like hugely dominant players and even though both Intel and AMD are US companies, the EC decided that there was a risk that the EU consumer was getting a raw deal.

And it has found evidence of business practices that it will today present as proving that Intel has abused its dominant market position.

The EC has identified the following practices as harmful:

- selling chips to governments at less than cost price. Aside from dumping issues, which also fall within the EC's scope, there is also the question as to whether this resulted in favouritism for Intel driven products.

- selling product to manufacturers at a stated price, but then giving substantial cash-back rebates as an inducement to use Intel chips

- taking steps to actively drive rivals, in particular AMD, out of the market. In this case the allegation is that Intel paid manufacturers to delay or abort development of motherboards and other devices designed for AMD chips so as to allow Intel to gain a head start with competing technology, on the basis that inertia is a difficult issue to overcome.

The EC, which through its DG IV directorate has extensive powers that over-ride national laws, last month raided Intel's German offices - and computer retailers in the UK, France and Germany. The formal DG IV announcement did not name Intel (see below).

The EC is proceeding under Article 82 of the EC Treaty which relates to abuse of dominant position but also considering action under Art. 81 which deals with restrictive trade practices including cartels and other arrangements between multiple parties.

This, then, means that other companies may in turn fall into the scope of the investigation. DG IV has powers relating to any company that does business in the EU, even if all of its operations are offshore.

Brussels, 12 February 2008

Commission carries out inspections in the Central Processing Unit (CPU) and PC sector

The European Commission can confirm that on 12th February 2008, Commission officials carried out unannounced inspections at the premises of a manufacturer of Central Processing Units (CPUs) and a number of personal computer (PC) retailers. The Commission has reason to believe that the companies concerned may have violated EC Treaty rules on restrictive business practices (Article 81) and/or abuse of a dominant market position (Article 82).

The Commission officials were accompanied by their counterparts from the relevant national competition authorities.

Surprise inspections are a preliminary step in investigations into suspected infringements of EC competition law. The fact that the European Commission carries out such inspections does not mean that the companies are guilty of anti-competitive behaviour; nor does it prejudge the outcome of the investigation itself. The European Commission respects the rights of defence, in particular the right of companies to be heard in antitrust proceedings.

There is no strict deadline to complete such investigations. Their duration depends on a number of factors, including the complexity of each case, the extent to which the undertakings concerned co-operate and the exercise of the rights of defence.