Intel appeal against anti-trust penalty dismissed by EU court

EU flagIntel’s appeal against its 2009 $1.44 billion fine for anti-competitive practices has been dismissed ‘in its entirety’ by the General Court of the EU.

“Intel granted rebates to four major computer manufacturers (Dell, Lenovo, HP and NEC) on the condition that they purchased from Intel all or almost all of their x86 CPUs. Similarly, Intel awarded payments to Media-Saturn (a PC retailer) which were conditioned on its selling exclusively computers containing Intel’s x86 CPUs,” says the judgment.

In Dell’s case, Intel got nearly 15% of the PC market in one deal. “Dell’s market share was 14.58% in the first quarter of 2003 and increased to 16.34% in the fourth quarter of 2005,” says the court, “given that Intel granted rebates to Dell on condition that Dell purchase all its x86 CPU requirements from it, that means that between 2003 and 2005 Intel had already foreclosed between 14.58% and 16.34% of the market solely by the rebates granted to Dell.”

The judgment goes on to say: “Intel awarded three computer manufacturers (HP, Acer and Lenovo) payments which were conditional upon their postponing or cancelling the launch of AMD CPU-based products and/or putting restrictions on the distribution of those products.”

“First, HP was to direct HP’s AMD-based x86 CPU corporate desktops to small and medium-sized business (SMB) and Government, Educational and Medical (‘GEM’) customers rather than to enterprise business customers;

“Second, HP was to preclude its channel partners from stocking HP’s AMD-based x86 CPU corporate desktops so that such desktops would only be available to customers by ordering them from HP either directly or via HP channel partners acting as sales agent;

“Third, Acer, HP and Lenovo were to delay or cancel the launch of computers equipped with AMD CPUs.”

As to the size of the fine, the court decided: “None one of the arguments raised by Intel supports the conclusion that the fine imposed is disproportionate.”

Japan and Korea have also found Intel guilty of anti-competitive behaviour.

When the Americans decided to look at Intel’s anti-competitive practices, the FTC chairman Jon Leibowitz, Chairman of the FTC, declared: “We believe Intel stepped well over the line of aggressive competition on the merits, and engaged in unfair, deceptive and anti-competitive conduct. The sum total of all this anti-competitive conduct unfairly prevented companies from competing, bolstered Intel’s monopoly, and harmed consumers by stunting innovation, diminishing quality, and keeping prices higher than they would otherwise be.”

Intel can appeal to the EU’s highest court the Court of Justice but only on points of law.

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