EC Details Complaints Against Intel

In a statement, the European Commission outlined some details that led to its $1.45 billion fine of Intel for anti-competitive practices meant to unfairly hamper commpetition from AMD. Those practices included conditional rebates and payments to OEMs. Intel officials accuse the EC of being one-sided and ignoring evidence positive to Intel.

SAN FRANCISCO -- Less than a month after Intel formally appealed the European Commission's $1.45 billion fine for antitrust violations, the EC is laying out its case to the public.

The commission on Sept. 21 published a "non-confidential version" of its May 13 ruling, in which the EC-the antitrust arm of the European Union-found that Intel sought to unfairly hinder competition in the x86 processor space through conditional rebates and through payments to OEMs to delay or halt the release of products powered by chips from rival Advanced Micro Devices.

According to the EC's documents, Intel gave rebates to Dell from December 2002 to December 2005 on the condition that the OEM only buy Intel processors. Commissioners cited an internal presentation from Dell in 2003 in which Dell officials said that if the company started to buy AMD chips, Intel's retaliation "could be severe and prolonged."
The EC also noted other internal Dell communications, including an e-mail from 2004 in which a Dell executive outlines a threat to stop the rebates should Dell begin using AMD products. In 2005, Dell became the last of the major OEMs to adopt AMD processors.
Similar conditional rebates were give to Hewlett-Packard, Lenovo, NEC and European PC retailer Media Saturn Holding, according to the EC.

In addition, commissioners said Intel gave HP payments on the condition that it limited the sales of AMD-based PCs to SMBs and only through direct distribution channels, and also that it delayed its AMD-based business desktop in Europe by six months.

Similar conditional payments also were given to Acer and Lenovo, the commission said.
Commissioners also said Intel officials tried to conceal such arrangements with Dell, HP and Media Saturn Holding, and the EC offered written statements from the OEMs attesting to the payments.

The EC said Intel's actions were in response to what company officials perceived was a growing threat from AMD, and that "Intel customers were actively considering switching part of their x86 CPU supplies to AMD."

Intel officials, who are kicking off their three-day Intel Developer Forum here Sept. 22, shot back at the EC in a statement.:

"Intel has reluctantly concluded that the Commission initiated the investigation with a predisposed view to alter the results of competition, and consequently tended to assess the evidence with a prosecutorial bent to confirm its point of view," Intel's statement said. "In doing so, it ignored or minimized - and indeed at times even refused to obtain - important evidence that contradicted its view of the world. The result was a consistently one-sided and result-oriented selection and interpretation of the evidence."

For example, Intel said that in an interview with European regulators, a Dell executive gave positive statements about Intel, statements the EC chose to ignore. Intel also said that the EC didn't understand the competitive nature of the x86 market.

In a session with reporters and analysts after his keynote at IDF Sept. 22, Intel CEO Paul Otellini again charged European commissioners with pursuing a one-sided investigation and disregarding testimony that is positive to Intel.

"I think they have consistently ignored information that would paint an entirely different picture around the memos" from OEMs that the EC unveiled Sept. 21, Otellini said.

He pointed to the interview with a Dell executive in particular, saying the EC ignore positive comments. He also lamented that while the EC can publish information that put Intel in a damaging light, Intel-because the case is under appeal-cannot yet release documents that support Intel's position.

Otellini also flatly denied the accusations of conditional rebates or industry payments to OEMs for favoring Intel over AMD.

"We do not do exclusive deals," he said.