Intel Loses Appeal to Overturn $1.4 Billion EU Fine

The region's second-highest court upholds the fines, agreeing with investigators that Intel abused its dominant position in the chip market.

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Intel lost its bid to have overturned a $1.4 billion fine levied five years ago by the European Union over anti-competitive practices.

The General Court of the European Union on June 12 ruled that the European Commission—the antitrust arm of the EU—was correct in finding that Intel used its dominant position in the x86 space to illegally persuade OEMs like Hewlett-Packard and Dell to favor its processors over rival Advanced Micro Devices and that the huge fine was justified.

"The General Court considers that none of the arguments raised by Intel supports the conclusion that the fine imposed is disproportionate," officials with the EU's second-highest court said in a statement. "On the contrary, it must be considered that that fine is appropriate in the light of the facts of the case."

Intel for many years has disputed those facts, saying that while the giant chip maker competed aggressively against AMD and others, its business practices never violated antitrust or other laws. That was the stance the company took when initially appealing the fine, and officials now must decide whether to push the case to the Court of Justice of the European Union.

In an email to eWEEK, Intel corporate spokesman Chuck Mulloy said the company is disappointed in the decision, adding that "we have said all along that the EC erred in many areas. After we've studied the decision, we will evaluate our options and decide what to do next. Intel already paid the EC's fine, in 2009. We have 70 days to appeal to the European Court of Justice, which is responsible for correcting erroneous interpretations or applications of EU law."

The European Commission handed down the fine in 2009, and Intel appealed it three years later, saying the antitrust investigators relied on inadequate information and erred in their analysis of the data.

The European Commission investigation was one of several conducted by government agencies worldwide against Intel for what they said were anti-competitive business practices by the world's largest chip maker to unfairly depress the use of AMD chips in PCs, moves that ultimately harmed consumers by limiting choice and competition.

Those practices came in the form of rebates and other financial incentives given by Intel between 2002 and 2007 to such PC manufacturers as HP, Dell, NEC and Lenovo on the condition that they buy most of their processors from Intel. In addition, Intel was accused of paying Media-Saturn, a retail chain in Germany, to sell only systems powered by Intel processors.

The European Commission ruled that—given Intel's dominant position in the market, with a more than 70 percent share in Europe—such rebates made it virtually impossible for other vendors to compete. The European court agreed.

"It was extremely difficult for competitors to enter the market and to expand as a result of the unrecoverable nature of investments [by Intel] to be made in research and development, intellectual property and production facilities," the court said in its statement. "Given its strong dominant position, Intel was an unavoidable supplier of x86 CPUs since customers had no choice other than to obtain part of their requirements from Intel."

Intel several years ago settled the bulk of the investigations and lawsuits related to the unfair practices allegations. Intel and AMD in 2009—after the European Commission fine was issued—settled their legal disputes in a 10-year deal that included Intel paying AMD $1.25 billion and agreeing not to use a range of anti-competitive business practices. Intel executives reiterated that the company had done nothing wrong.

The European Union has been aggressive in investigating tech companies, ranging from Microsoft to Google to Apple.