EU fines Intel $1.45 billion

European regulators say the chipmaker illegally gave rebates to producers to squeeze out competitors.

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NEW YORK (CNNMoney.com) -- European regulators slapped Intel Corp. with a record fine of $1.45 billion Wednesday after a nearly eight-year long antitrust case.

The European Commission said Intel (INTC, Fortune 500), the world's largest chipmaker, violated European antitrust laws by unfairly paying computer makers to delay or even cancel products that contained chips made by rival AMD (AMD, Fortune 500).

"Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," said Neelie Kroes, the EU competition commissioner, in a statement. "Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated."

The fine, which could have been as high as $3.8 billion, trumps the $1.2 billion fine levied by the EC against Microsoft Corp. (MSFT, Fortune 500) in 2008. Microsoft was accused of pricing out rivals and refusing to comply with the court's previous antitrust decision.

As part of Wednesday's decision, Santa Clara, Calif.-based Intel, which makes roughly 80% of the microchips in personal computers and servers, was also forced to discontinue to some of the rebates it gives to computer makers.

Intel said in a statement that it takes "strong exception" to the EC's decision and pledged to appeal.

"We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace," said Paul Otellini, Intel president and chief executive, in a statement. "There has been absolutely zero harm to consumers."

Otellini said Intel does not sell products below cost, but he added that the company does discount prices to remain competitive.

The case dates back to 2001, when the EC began investigating AMD's claims that Intel was engaged in unfair business practices. However, Intel was not charged until July 2007.

The announcement came just two days after President Obama's top antitrust official said the administration will aggressively crack down on antitrust violations, reversing a Bush-era policy that had weakened the government's ability to take on monopolies.

After Bush became president in 2001, an increasing number of plaintiffs, including AMD, opted to take antitrust cases straight to European courts.

"The EU decision will shift the power from an abusive monopolist to computer makers, retailers and above all consumers," said Giuliano Meroni, president of AMD's European division, in a statement.

The ruling serves as the latest setback for Intel. Last month, the company reported its first-quarter profit fell 55% and revenue fell 26% on plummeting PC sales.

Intel's stock was up 16 cents in pre-market trading to $15.37 a share.  To top of page

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