Formal antitrust charges against computer chip maker Intel in Europe are coming closer, after officials working on the case advised European Union Competition Commissioner Neelie Kroes to push ahead with legal action, according to reports.
The European Commission (EC) spokesman for competition, Jonathan Todd, declined to comment on the reports, which have appeared in the Wall Street Journal and on Reuters. "We have an ongoing case against Intel. I can't say any more than that," he said.
The reports said a decision to send Intel a so-called ‘statement of objections’ could be taken at any time now, although Kroes is understood to be proceeding cautiously.
Intel's spokesman in Brussels, Chuck Mulloy, wasn’t immediately available to comment.
The Commission has been examining Intel's behaviour in the European chip market for more than six years. Rival chipmaker Advanced Micro Devices (AMD) complained to the European regulator in 2000 that Intel, with around 80% market share, was pressuring computer manufacturers to remain loyal to its products by offering them rebates.
AMD believes this is a coercive tactic that distorts competition, Tom McCoy, the company’s executive vice president for legal affairs said last year. The Commission has hesitated in taking action because these rebates help reduce the price of chips to the end user. However, the regulator must weigh this benefit against the long-term cost of potentially allowing one competitor to foreclose the market for a product that is essential for all computers.
If the Commission does issue a statement of objections then Intel will have to reply to the charges in writing. It would then be given the opportunity to present its arguments in a closed door hearing with the Commission and rivals.
The process can take years, but if the regulator concludes that Intel has abused its dominant position in the market it could be fined up to 10% of its global annual sales.
Japanese competition officials declared that Intel's rebate schemes are illegal in 2005. Intel is appealing that finding.
AMD has filed an antitrust case against Intel in a US federal court, which is still pending. Meanwhile, South Korea is also investigating Intel's practices.