After an 8-year investigation, the European Union nailed Intel with a record-setting $1.45 billion fine this past May, finding the chip maker guilty of anticompetitive practices. As was expected, Intel has filed an appeal with Europe's second highest court, the Luxembourg-based Court of First Instance.
The $1.45 billion fine ranks as the highest ever imposed by the EU to a company, which represents 4.15 percent of Intel's 2008 turnover. Even worse (for Intel), some analysts say the Commission's finding could lead to its U.S. counterparts also taking legal action against the chip maker.
Looking to avoid any further fines from the European Union, which has been anything but bashful in levying big money fines against big money corporations, Microsoft is in talks to settle two additional probes that could potentially add to the $2.34 billion it has already had to fork over from previous cases.
The most pressing matter is a case over Microsoft's Internet Explorer browser, in which Microsoft has previously stated it would ship a version of Windows 7 for distribution in Europe with IE8 stripped out. This came in response to the commission saying it was considering forcing Microsoft to offer consumers a choice of browsers when configuring a new PC. Microsoft canceled a June hearing in the browser case, saying not enough EU and national competition authorities would be able to attend.
"It's in their interest to settle before the EU has to impose sanctions," said Matt Rosoff, an analyst at Kirkland, Washington-based Directions on Microsoft. "That way at least Microsoft has some control over the actions they're going to take if they can agree in private."
But the browser issue isn't the only thing the EU is concerned with. The EU is also looking into complaints that Microsoft doesn't provide formatting and other information for rival products to work with Microsoft Office software, such as Word and Excel, Bloomberg reports.
When AMD heard the news that the European Commission had found Intel guilty of anticompetitive business practices and hit the No. 1 chip maker with a record setting $1.45 billion fine, we imagine the response behind closed doors was something along the lines, "Woohoo!!," followed by a series of high-fives. After all, AMD has been crying foul for years over allegations that Intel was issuing illegal rebates and other incentives to vendors and retailers to stop them from selling AMD chips. But while AMD execs are probably dancing on their desks in jubilation, the No. 2 chip maker's official response took on a decidedly more business-like (though no less giddy) tone.
"After an exhaustive investigation, the EU came to one conclusion - Intel broke the law and consumers were hurt," said Tom McCoy, AMD executive vice president for legal affairs. "With this ruling, the industry will benefit from an end to Intel's monopoly-inflated pricing and European consumers will enjoy greater choice, value, and innovation."
In a press release, AMD went on to say that Intel has so far failed to convince any antitrust enforcement agency that its business practices are lawful and pro-consumer. AMD points out past fines and rulings against Intel on similar matters, including a 26 billion won fine (about $25.4 million USD) in 2008, a ruling in 2005 by the Japan Fair Trade Commission finding that Intel had violated the country's anti-monopoly laws, and an ongoing investigation by the FTC here in the States with a trial scheduled for spring 2010.
The European Commission today told Intel it has to cough up $1.45 billion in fines, and it did so without the threat of sharks with fricken' lasers or blowing up the earth. Dr. Evil would be proud.
Intel stood accused of anticompetitive practices, allegedly offering large rebates to computer manufacturers and retail chains in exchange for snubbing rival chip maker AMD. Reports started trickling out earlier this week that Intel would be fined for its actions, with some savvy experts predicting it could be as high as $1.3 billion. While not quite as high, the 1.06 billion euros ($1.45 billion) the EC did settle on sets a new record, dwarfing the 476 million-euro fine it hit Microsoft with in 2004, also a new record at the time.
"Intel has harmed million of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," European Union Competition Commissioner Neelie Kroes said.
In addition to the exorbitant fine, Intel was order to cease all illegal practices immediately, including halting illegal rebates.
Citing "sources familiar with the case," Reuters reports that EU antitrust regulators believe Intel illegally paid computer makers to postpone or cancel the launch of AMD-based products.
An official statement from the EU regulators is expected to come this Wednesday, at which time it will have decided on an appropriate fine. There's been no indication so far of what amount it might be, however the largest fine ever handed out by the European Commission was 479 million euros, or $655 million, to Microsoft in 2004 for allegedly freezing out rivals in server software and products.
According to the report, EU execs will say that Intel gave rebates to computer makers in exchange for restricting the use of AMD chips, while also providing other incentives to retailers to sell just Intel-based systems. Sources say the ruling will order Intel to end the alleged illegal rebates by a certain date.
Although Microsoft is concerned about the likelihood of EU requiring it to bundle other browsers with Windows, Firefox architect Mike Connor isn’t exulting. He, personally, despises the idea of other browsers, including Mozilla Firefox, being packaged with Windows. Connor told PC Pro in an interview,” The choice [when installing Windows] would be weird. There's no good UI [user interface] for that.” Connor’s views on this particular issue are his alone and should not be construed as Mozilla’s official line.
He then proceeded to take Opera to task for having complained to the EU about Microsoft’s bundling of IE with Windows. Connor thinks that the quality of the product is paramount and bundling doesn’t necessarily lead to market share. He labeled Opera – based on other people’s feedback – a “geeky browser” that is difficult to use.
The report has torrent websites and their users in its crosshairs. It seeks to ban all torrent websites like The Pirate Bay – specifically mentioned in the report, as they “allow downloading of protected works or services without the necessary authorization are illegal.” However, the presumption that the illegality of such torrent portals follows from their illegal use is not entirely incontrovertible.
Ortega not only proposes to saddle ISPs with more responsibility, he wants them to be able to be more powerful than before. He suggests that ISPs be allowed to disconnect transgressors.