July 26 (Bloomberg) -- European regulators are bringing antitrust charges against Intel Corp., accusing the world's biggest chipmaker of using illegal rebates in its fight against Advanced Micro Devices Inc.

A statement of objections, or an official charge sheet, was sent today, said Ton Van Lierop, a spokesman for the European Commission, the European Union's antitrust regulator in Brussels.

The decision to bring a formal case follows a six-year probe into alleged illegal discounts to personal-computer makers. Intel, based in Santa Clara, California, dominated sales with about 80 percent market share until last year. Advanced Micro came back with newer chips and won over customers, and Intel ended 2006 with its share at an 11-year low.

Intel will have two months to respond to the charges and a final decision can be appealed at European courts. Under EU rules, companies can be fined up to 10 percent of annual sales for breaking antitrust rules.

The commission's biggest antitrust fine was a 497 million- euro ($683 million) penalty against Microsoft Corp. in 2004 for abusing its dominant position in PC operating systems.

Chuck Mulloy, a spokesman for Intel, declined to comment. Advanced Micro spokesman Drew Prairie said the company hasn't heard directly from the EU and won't comment until it does.

``We have always applauded governmental decisions to bring full and fair competition to the global microprocessor market,'' Prairie said in an e-mail.

Reuters reported the charges earlier today.

Market Share

Advanced Micro has claimed that Intel maintained its share of the $33 billion market for microprocessors by ``engaging in a relentless, worldwide campaign to coerce customers to refrain from dealing with AMD,'' Sunnyvale, California-based Advanced Micro said in a lawsuit filed in June 2005 at U.S. District Court in Wilmington, Delaware. The case is still pending.

New technology helped Advanced Micro slim Intel's lead, giving the company about 25 percent market share at the end of 2006, according to Cave Creek, Arizona-based Mercury Research. Intel had 74 percent.

The fight has taken a toll on earnings. On July 20, Advanced Micro reported a third consecutive quarterly loss after cutting prices to compete with Intel and maintain its market-share gains.

EU Probe

The EU action would mark the first time that Competition Commissioner Neelie Kroes has pursued formal charges against a company for alleged abuse of a dominant market position.

The EU first began investigating Intel after a 2001 complaint by Advanced Micro. Intel was accused of offering illegal marketing rebates, selectively disclosing technical information and threatening circuit board makers that used rival products.

In February 2002, the commission said its ``preliminary assessment'' was that complaints that Intel abused its dominant position through rebates to prevent customers from going to rivals were ``unfounded.''

The commission then reopened the probe in June 2004 after Advanced Micro offered new information that Intel gave illegal rebates and threatened companies that used rival products. The commission raided Intel's European office in July 2005, looking for evidence of anti-competitive actions.

Intel has also faced antitrust investigations in Japan and Korea. The chipmaker agreed in April 2005 to remove clauses that restrict Japanese computer makers from using other semiconductors following a ruling by Japan's antitrust authority. Korean officials raided Intel offices in February 2006.

To contact the reporter on this story: Matthew Newman in Brussels at Mnewman6@bloomberg.net; Ian King in San Francisco at ianking@bloomberg.net

Last Updated: July 26, 2007 18:39 EDT