EU reveals details of Intel case

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After fining Intel €1 billion in May, the European Commission has released details of the anti-competition case it has against the chip maker.

The EC said Intel excluded competitors from the market, which in turn hurt consumers, through a system of rebates designed to stop manufacturers from using rival CPUs – namely from smaller rival AMD.

According to an internal Intel email cited in the EC document, Intel’s rebates to Dell between 2002 and 2005 meant the PC maker had to exclusively use Intel CPUs, or face “severe and prolonged” retaliation.

Over a similar time frame, HP was told it must purchase no less than 95 per cent of its CPUs from Intel, while NEC had an 80 per cent restriction. Lenovo was convinced to buy only Intel products for its notebooks, with one executive saying in an email: “" Late last week Lenovo cut a lucrative deal with Intel. As a result of this, we will not be introducing AMD based products in 2007 for our Notebook products.”

Intel was also accused of placing other restrictions on manufacturers. HP was told to sell AMD-based machines to small businesses only, and – at the risk of losing Intel cash – was encouraged to hold off launching an AMD-based desktop by some six months.

The EC also accused Intel of paying off Acer and Lenovo to delay releases of AMD notebooks.

The deals were often secretive and completed verbally, the EC noted, with Dell telling the regulators that " there is no written agreement between Intel and Dell concerning the MCP [rebate] discount, rather, the discount is the subject of constant oral negotiations and agreement".

According to the EC, “the evidence demonstrates... how the various Intel conditions were an important factor in their decisions not to partially switch to or buy more x86 CPUs from AMD, Intel's main competitor in the x86 CPU market.”

The regulator said that Intel’s customers were increasingly considering switching to AMD, citing a Dell email to Intel which said: "AMD is a great threat to our business. Intel is increasingly uncompetitive to AMD which results in Dell being uncompetitive to [Dell competitors]. We have slower, hotter products that cost more across the board in the enterprise with no hope of closing the performance gap for one to two years."

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