Intel Faces European Antitrust Charges - TheStreet

Intel Faces European Antitrust Charges

The EC alleges the company tried to keep AMD out of the market.
Author:
Publish date:

Updated from 1:10 p.m. EDT

Intel

(INTC) - Get Report

suffered a legal blow late Thursday after European regulators brought formal antitrust charges against the chipmaker.

The European Commission filed a statement of objections concerning Intel's business practices, contending that the company has abused its dominant position in the microprocessor market, with the intent of excluding rival

Advanced Micro Devices

(AMD) - Get Report

.

"In the short, medium and long term we think the actions of Intel are bad news for competition and consumers," said EC spokesperson Ton Van Lierop at a press briefing.

The EC's statement of objections alleges that Intel paid a computer maker to cancel or delay the launch of a product line featuring an AMD microprocessor.

The commission also said Intel has provided rebates to computer makers, conditional on them obtaining all or the great majority of their microprocessors from Intel, and that Intel has cut its server-chip prices below costs to certain customers in order to outbid AMD.

Intel is the world's No.1 chipmaker, and it controls about 75% to 80% of the PC microprocessor market, depending on the quarter.

Intel issued a statement Friday asserting that the company believes the microprocessor market is functioning normally and that its conduct has been lawful.

"While we would certainly have preferred to avoid the cost and inconvenience of establishing that our competitive conduct in Europe has been lawful, the Commission's decision to issue a Statement of Objections means that at last Intel will have the opportunity to hear and respond to the allegations made by our primary competitor."

AMD filed a complaint with the European Commission in 2000. The company also has filed a civil antitrust suit against Intel in Delaware federal court. That case is currently in discovery stage, with the trial set to begin in April 2009.

In March 2005, Japan's Fair Trade Commission concluded that Intel had violated Japan's anti-monopoly act. Intel did not admit wrongdoing in the case, but accepted the agency's remedy, which involved ceasing certain business practices. South Korean authorities are also investigating Intel's practices.

The commission's statement of objections is a formal step in European antitrust investigations in which parties are informed of the complaints against them. If the issues in the statement of objections are ultimately confirmed by the commission, Intel could face fines and forced to cease certain practices.

Intel has 10 weeks to respond in writing to the statement of objections and will then have the right to argue its case in an oral hearing.

Despite the apparent setback for Intel, the company's shares were off just 13 to $23.87; shares of AMD were down 69 cents, or 4.7%, to $14.04.