Intel Corporation Case Study

13 May, 2009 - European Union fines Intel Corporation a record €1.06bn fine for violating Competition Law. EU Antitrust Commission imposes fine for violating European Community Treaty antitrust rules by an abuse of dominant position through illegal practices, excluding competitors from a market for computer chips called x86 central processing units (CPUs) (1). Intel Corp. refused playing guilty and asked judges to overturn the antitrust fine, arguing that EU failed to use mitigating evidence and “capture dynamics of competition”, according to Nicholas Green, lawyer of Intel.

The purpose of this research is to identify and discuss the basis for the concerns and intervention of the regulator, in this case – European Union Antitrust Commission. Furthermore, the nature and effectiveness of the fines imposed will be evaluated.

Facts and Legal Issues Regarding Intel Corp. Case

Following an eight-year investigation, the European Union found Intel Corp. guilty in abuse of its dominant position in the market for CPUs. Two (“A” and “B”) practices were investigated by EU Antitrust Commission:

“A” - Rebates and payments, used by Intel to award major computer manufacturers:

1. Dell was given rebates from December 2002 to December 2005 conditional on this manufacturer purchasing exclusively Intel CPUs (3).

2. Lenovo was given rebates from November 2002 to May 2005 on condition that this manufacturer would purchase not less than 95% of Intel CPUs (3).

3. HP was given rebates from October 2002 to November 2005 on condition that this manufacturer would purchase not less than 80% of Intel CPUs (3).

4. NEC was given rebates in 2007 on condition that this manufacturer would use exclusively Intel CPUs for its notebooks (3).

5. Direct payment...

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...rturn the judge’s decision but a record amount of EUR 1.06BN is a serious warning to any company.

Conclusion

In 13 May, 2009 - European Union fines Intel Corporation a record €1.06bn fine for violating Competition Law. Cheque for the fine has not been signed yet, as Intel Corporation continues appealing to higher courts. Illegal rebates and direct payments practice by Intel Corp. show the level of irresponsibility within a multi – billion dollar company.

The decision of EU Court of Justice fined the corporation and obliged to stop infringements immediately but will it turn around and start playing fair? Even in court processes, the lawyers of Intel are blaming EU by itself for illegal practices against Intel Corp., claiming that EU Antitrust Commission is turning down Intel documents and denying the right of defense (6). Will Intel Corporation escape the law?