Information Technology

Intel Appeal of $1.4 Billion Fine Rejected

12 June 2014

The European General Court in Luxembourg has dismissed an appeal by Intel against a €1.06 billion fine imposed on the company by the European Commission in 2009 for abusing its dominant position in x86 processors between 2002 and 2007.

The main practise that Intel was found to have indulged in during that time was to grant rebates to four major computer manufacturers – Dell, Lenovo, Hewlett Packard and NEC – on condition they bought all, or nearly all their processor chips from Intel. Intel also paid a computer sales company called Media-Saturn to sell only computers that contained x86 processors.

It was also found that Intel paid three computer manufacturers, HP, Acer and Lenovo, to postpone or cancel the launch of products based on processor from rival Advanced Micro Devices Inc. or to put restrictions on the distribution of these products.

Intel did not put these conditions into written contracts and tried to conceal them, according to the European Commission.

After an investigation the European Commission ruled back in May 2009 that this was an abuse of Intel's position in the market and imposed the largest ever fine against a single company for breach of competition rules. In response Intel sought to have the decision overturned or at least have the size of the fine reduced.

The court said that rather than the fine being too large it had been set at 4.15 percent of Intel's annual revenue at the time and well below the 10 percent limit set within guidelines.

The European Commission welcomed the judgment, which has upheld the decision taken more than five years earlier. One of the defences was that some of the behavior took place outside Europe and outside the European Commission's jurisdiction. The European Commission said the ruling established that it was justified in pursuing anticompetitive conduct across the world in a major worldwide market.

Intel can still make a further appeal to the European Court of Justice within the next two months.

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