As reported in the May 2009 edition of the Competition and Market Regulation Update,4 the European Commission (EC) fined Intel Corporation (Intel) a record €1.06 billion after finding that between 2002 and 2007 Intel held a dominant position in the market for x86 Central Processing Units (CPUs) and that it had abused its dominant position to foreclose competition in that market. The EC has now released detailed reasons for its decision.

The conduct

The EC found that Intel had engaged in a continuous strategy aimed at foreclosing competition in the relevant market through:

  1. Conditional rebates: at various times Intel:
    • provided rebates to a number of computer manufacturers on the basis that these companies would purchase all or almost all the CPUs they required from Intel, and
    • made payments to a key computer retailer on the basis that that retailer would sell exclusively Intel-based PCs, and
  2. Naked restrictions: Intel made payments to several computer manufacturers on the basis that those manufacturers would delay the launch of computers made with CPUs of Intel’s only significant competitor (AMD) and imposing additional restrictions on the distribution of those computers.

The amount of the fine

In determining the value of the fine imposed on Intel, the EC considered:

  • the volume of sales arising directly or indirectly from Intel’s conduct
  • the gravity of the infringement, including that the conduct
    • took place in a market of great economic importance
    • affected competition throughout the whole of the European Economic Area, and
    • was part of a continuous strategy aimed at foreclosing competition from Intel’s only significant competitor in a market where the high level of investment required made new entry difficult
  • the infringement took place over a period of more than five years, and
  • there were no mitigating circumstances justifying any decrease in the base amount of the fine.