The European Commission has imposed a fine of EUR 1.06 billion (approx. USD 1,450 million) on Intel Corporation for violating European competition rules. Intel was found to have abused its dominant position in the market for computer chips (x86 central processing units) by engaging in a series of illegal anti-competitive practices.

The Commission found that Intel had implemented a rebate scheme which, in essence, ensured that the manufacturers purchased all or most of their requirements from Intel. In one case, the rebate only applied if the manufacturer purchased 95 per cent of its requirements from Intel and in another case that it was conditional on the purchase of 80 per cent of all requirements. While rebates can be pro-competitive, the application by a dominant company of rebates which are conditional on buying less of a rival’s products, or not buying them at all, are often considered to be abusive. For this reason, Intel’s rebate scheme was condemned by the Commission as an abuse of its dominant position.

In addition, the Commission found that on a number of occasions Intel paid manufacturers to halt or delay the production of computers incorporating the chips manufactured by its rival, AMD. Intel also made payments to a large retailer on condition that it stock only computers with Intel’s computer chips.

The EU Commissioner for Competition, Neelie Kroes, denounced Intel’s activities saying “Intel has harmed millions of consumers by deliberately acting to keep competitors out of the market”. The fine of EUR 1.06 billion is the largest ever imposed by the European Commission and amounts to approximately 4 per cent of Intel’s turnover in 2007 (EUR 27,972m). Intel has issued a statement saying that it will appeal against the decision.