The European Commission has accused Intel of abusing its dominant position in the microprocessor market to the detriment of rival Advanced Micro Devices.
The Commission sent Intel a formal accusation of antitrust violations, known as a statement of objections, on Thursday, and has given the company 10 weeks to reply, the Commission said today.
Intel abused its position in three ways, according to the Commission: by offering rebates to PC makers who agree to buy the majority of their processors from Intel; by making payments to some manufacturers to encourage them to delay or cancel products using AMD processors, and by selling processors below cost when bidding against AMD for contracts with server makers.
“The Commission has been looking extremely rigorously at the effects of Intel's practices since 2000, in particular the policy of granting rebates in such a quantity that an efficient competitor would be forced to price (its chips) at below cost,” Commission spokesman Ton Van Lierop said at a press conference Friday.
The Commission determined that Intel’s behavior had been “bad news for consumers and computer makers,” he said.
Intel was not immediately available for comment. It has said in the past that it thinks its business practices are entirely legal.
AMD greeted the news with enthusiasm, calling it “a moment of truth for the entire IT industry”. The Commission's action will open the global microprocessor market for the benefit of both consumers and PC companies, Giuliano Meroni, AMD’s president for Europe, the Middle East and Africa, said in a statement.
After Intel replies to the charges, it can request an oral hearing. If the Commission remains convinced that Intel has abused its market position, it can fine the company up to 10% of its global annual sales and order it to stop the anticompetitive behaviour.
There is no deadline for the Commission to reach a final decision.
AMD has already filed antitrust complaints against Intel in several parts of the world, including Europe, the US and Japan. Its complaints echo the charges levelled by European regulators today: that Intel used its market power to illegally coerce PC makers into not using its rivals' products.
Intel has previously settled antitrust charges in the US, although those charges were different in nature. The US Federal Trade Commission filed suit against Intel in 1998, accusing it of using its market dominance to coerce trade secrets from customers. Intel settled that case the following year. It agreed to refrain from certain practises but denied any wrongdoing.