EU publishes emails to defend Intel anti-trust case

21 Sep 2009

The EU has today published a non-confidential version of its decision in the anti-trust case against US firm Intel, including quotes from executive emails, to back up the record €1.06bn fine it imposed on the computer-chip giant in May.

The commission’s decision resulted in Intel being slapped with a record €1.06bn fine by the European Commission, the largest it has ever imposed on a single company.

According to the commission, throughout the period October 2002–December 2007, Intel abused its dominant position in the worldwide x86 CPU market by engaging in illegal anti-competitive practices designed to exclude competitors.

In its decision in May, the commission found that Intel gave wholly or partially hidden rebates to computer manufacturers on condition that they bought all, or almost all, their x86 CPUs from Intel.

The computer manufacturers concerned were Acer, Dell, HP, Lenovo and NEC.

Intel’s second infringement of anti-trust rules involved it making direct payments to computer manufacturers aimed at halting or delaying the launch of specific products containing chip maker AMD’s x86 CPUs and limiting the sales channels available to these products.

The further details of the commission’s decision published today give examples from companies such as Dell, Lenono, Hewlett-Packard and Acer in which company executives outline the stark choices faced by them if they do not cede to Intel’s demands that they choose its chips over its rival AMD.

This includes a February 2004 internal Dell email on the consequences of the possible purchase by Dell of AMD chips. In the email a Dell executive writes: “Boss, here’s an outline of the framework we discussed with Intel. (…) Intel is ready to send [Intel Senior executive] /[Intel executive] /[Intel executive] to meet with [Dell Senior Executive]/[Dell Senior Executive]/[Dell Executive] . (…)

“[Intel Senior executive] /[Intel Senior executive] are prepared for [all-out war] if Dell joins the AMD exodus. We get ZERO MCP [name of Intel rebate to Dell] for at least one quarter while Intel ‘investigates the details’ (…) We’ll also have to bite and scratch to even hold 50pc, including a commitment to NOT ship in Corporate. If we go in Opti [Dell product series for corporate customers], they cut it to <20pc and use the added MCP to compete against us.”

Intel is appealing the commission’s decision and has accused the European Commission of inappropriate tactics in reaching its decision on the anti-trust case.

“The commission relied heavily on speculation found in e-mails from lower level employees that did not participate in the negotiation of the relevant agreements, if they favoured the commission’s case,” said Robert Manetta, an Intel spokesman in London, the New York Times has reported.

Investigators also “ignored or minimised hard evidence of what actually happened, including highly authoritative documents, written declarations and testimony given under oath by senior individuals who negotiated the transactions at issue,” Manetta said.

When handing down its decision in May, the commission said the €1.06bn fine imposed on Intel took into account of the duration and gravity of the infringement and was calculated on the value of Intel’s x86 CPU sales in the European Economic Area.

Intel holds at least a 70pc share of x86 CPU market globally, which is currently worth about €22bn (US$30bn) per year, with European sales accounting for about 30pc of that.

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