Europe to Nail Intel on Antitrust

Things are heating up in Brussels for the world's largest chipmaker, U.S.-based Intel (INTC). In a case with far-reaching implications for the technology sector and global antitrust enforcement, the European Union's top brass will probably decide on May 13 to find the dominant maker of computer processors guilty of violating EU monopoly rules. The penalty could include a large fine in excess of €1 billion ($1.36 billion) and restrictions placed on Intel's marketing practices. Spokespeople for both the European Commission and Intel declined to comment on the case or the news reports leaking out about it.

The long-running antitrust case, first launched in 2000 at the request of semiconductor rival Advanced Micro Devices (AMD), hinges on Intel's use of rebates to computer makers and retailers to encourage the purchase of its microprocessors or PCs containing them. While it's perfectly legal for companies to offer sales incentives, the law takes a more jaundiced view of rebates offered by companies with dominant market positions, because the payments may serve to lock in a monopoly. Intel currently enjoys nearly 80% global market share in PC processors. EU law also forbids companies from selling products at below cost to exclude competitors, which AMD claims Intel did in some cases.