EU says Intel tried to squeeze out AMD

The European Union’s top antitrust regulator has charged that Intel tried to use its huge market share to push smaller rival Advanced Micro Devices (AMD) out of the central processing unit business.

The two companies make all the chips at the processing heart of the world’s one billion personal computers and servers, but Intel has about 80% of the business.

The European Commission, in its latest antitrust case to involve a technology giant, alleged Intel broke EU law ”with the aim of excluding its main rival, AMD, from the x86 computer processing units (CPU) market.”

X86 is the designation for the chips.

Intel’s general counsel said the company had followed the law and said the commission had included some errors in its charge sheet.

”We are confident that the microprocessor market segment is functioning normally and that Intel’s conduct has been lawful, pro-competitive, and beneficial to consumers,” Bruce Sewell said in a statement.

The EU executive sent the charges to Intel on Thursday and made the details public on Friday, saying the company had committed three types of antitrust violation.

”The commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anti-competitive strategy,” its statement said.

Abuse charges

The commission said the three abuses were:

  • Intel provided conditional rebates to computer makers so long as they agreed to obtain most or all of their CPU chips from Intel.

  • Intel made payments ”to induce [computer makers] to either delay or cancel the launch” of products that used AMD chips.

  • Intel provided CPU chips to strategic customers at below cost ”in the context of bids against AMD”.

Intel can respond to the charges and seek a hearing.

The commission can fine Intel if, after considering the company’s formal response, it finds the charges are justified. Such a fine could be up to 10% of annual turnover, but experts say the chances of such a large penalty are remote.

Intel can appeal in the courts against a commission decision.

AMD said on Friday that the European Union charges against Intel would benefit consumers and computer makers.

”We are confident that this statement of objections will be a catalyst in opening the global microprocessor markets for the benefit of consumers and PC companies alike,” said Giuliano Meroni, AMD president for Europe, Middle East and Africa.

AMD gained market share against Intel in 2005 and most of 2006, but suffered a downturn later last year when Intel rolled out powerful new processors and cut prices on older models.

AMD’s market share at the end of 2006 was 25% of unit shipments for x86 processors. But by the end of March 2007, AMD had slipped to less than 19%, according to market research firm Mercury Research.

The charges come as the commission faces a challenge to its authority to enforce the law against abuse of market dominance.

In 2004 the commission found software company Microsoft had competed unfairly, ordering it to change its practices and fining it nearly â,¬500-million ($686-million).

Microsoft challenged the decision and a European Union court will rule on that case on September 17. – Reuters

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