In May 2009, the European Commission issued a decision fining Intel EUR 1.06 billion (USD 1.45 billion) for infringing European competition rules. The Commission concluded that Intel abused its dominant position on the market for computer chips (x86 central processing units) by engaging in a series of anticompetitive practices that violated Article 82 of the EC Treaty. The Commission's actual decision, however, has not been available to the public until now. This week, the Commission published a 518-page non-confidential version of its decision against Intel. The decision, which is available on the European Commission’s website, confirms Intel's abuses and provides greater detail concerning its analysis. Significantly, the published decision provides insight into the Commission's methodology in calculating Intel's fine—the largest fine ever assessed on a single company.
The Commission cited Intel for infringement relating to conditional rebates and so-called "naked restrictions." First, with respect to conditional rebates, the Commission concluded that Intel utilised a rebate scheme that ensured that manufacturers purchased all or almost all of their requirements from Intel. The Commission cited instances where Intel only granted a rebate if the manufacturer purchased 80 per cent or 95 per cent of its requirements from Intel. Although rebates can be procompetitive, the Commission considered that rebates given by a dominant company that are conditional on buying less of a rival's products or not buying them at all often constitutes an abuse of a dominant position. Separately, the Commission found that on several 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 Commission characterised these as "naked restrictions" and held that they violated Article 82 EC.
Notably, the published decision explains the basis for Intel's fine. The Commission justified the imposition of a fine because conditional rebates and so-called "naked restraints" have previously been condemned by European Community Courts and Commission decisions, and Intel should have been aware of this. In calculating the fine, the Commission applied the principles contained in its Fining Guidelines, issued in 2006. It first calculated Intel's sales of x86 central processing units into the European Economic Area for the last full business year of the infringement, ending in 2007. After assessing the gravity of Intel's offence, the Commission decided to take 5 per cent of Intel's turnover and multiply that amount by the duration of the infringement—5.5 years. This led to a total of EUR 1.06 billion. The Commission rejected Intel's arguments to reduce the fine based on mitigating factors. As a result, the final amount of Intel's fine was set at EUR 1.06 billion.
In recent days, Intel has appealed the Commission's decision to the European Court of First Instance, asking that court to set aside the Commission's decision or at least reduce the fine. In particular, Intel has accused the Commission of failing to analyse whether Intel's conduct led to market foreclosure, in addition to making numerous other analytical errors and failing to meet the standard of proof.The Commission’s decision is available at http://ec.europa.eu/competition/sectors/ICT/intel_provisional_decision.pdf.