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Intel Decision 'Too Late to Save Competition'

The European Commission slapped a €1.06 billion fine on the microprocessor giant Intel Wendesday for beating down competitors with anticompetitive business practices. German commentators are happy with the decision -- but not with the fact that it took eight long years to reach.

It was the biggest anti-trust fine ever levied by the European Union. Brussels on Wednesday ordered the computer chip maker Intel to hand over €1.06 billion ($1.45 billion) for using unfair sales tactics that violate EU antitrust laws.

"Intel has harmed millions of European customers by deliberately acting to keep competitors out of the market for computer chips for many years," EU Competition Commissioner Neelie Kroes told reporters Wednesday when announcing the fine, which surpassed the previous record fine of in 2008 for its anticompetitive practices.

Specifically, the California-based company was found guilty of paying computer manufacturers not to use chips made by rival Advanced Micro Devices (AMD), paying illegal rebates to encourage computer makers to use Intel products and paying retailers to only stock computers that use Intel chips.

Intel downplayed the importance of the ruling. "This is really just a matter of competition at work, which is something I think we all want to see, versus something nefarious," Intel CEO Paul Otellini said, according to the Associated Press. But the company is also being investigated by the US Federal Trade Commission and will have to defend itself next year against a lawsuit brought by AMD in a US federal court.

Germany stands to benefit from the decision because AMD employs 2,700 people at its primary microprocessor manufacturing and design facilities based in Dresden.

The EU ordered Intel to pay the fine within three months, though the company has said it will appeal the decision.

German commentators applaud the commission's scolding of Intel, but say it came too late -- after an eight year court case, during which time Intel further established its market dominance.

The center-left Süddeutsche Zeitung writes:

"It doesn't help to have the best products if your rival is bribing potential customers into thinking twice about buying them. That's what happened with Intel, and the EU Commission has presented evidence indicating that the top dog abused its power. The record fine is meant to be both a penalty and a deterrence. But the decision has come too late to save competition...."

"In the meantime, AMD has lost a lot of blood...and in some sectors, such as the growing market for mobile computers, AMD has no products that can compete with Intel's. It took Brussels eight years to handle the Intel case. That was too long."

The Financial Times Deutschland writes:

"The fact that (Intel) is by far the dominant market player and is in better shape than AMD is a partial result of the fact that its dominance was helped along by years worth of unlawful practices. For example, Intel paid the electronics retail chain Media-Saturn (eds. note: MediaSaturn Holding owns both and its rival Saturn, both of which are major consumer electronics retailers), which has 770 stores in Europe, to only sell PCs outfitted with Intel chips."

"When it comes to protracted antitrust litigation, it often happens that the competitive advantages gained through illegal practices can hardly be corrected after the fact. For that reason, the damaged party is oftentimes not satisfied even after winning its case."

"But that doesn't at all mean that Intel won't be bothered by the EU Commission's decision. Much worse than the monetary penalty is the fact that the company is now obliged to alter its business practices -- immediately. In the near future, when customers go into a Media Markt and see laptops and desktops outfitted with AMD microprocessors, it will also be them -- and not just AMD -- that benefit from the antitrust decision. Many PC users don't even know that there is an alternative to the aggressively marketed Intel products."

The Handelsblatt business daily writes:

"In the end, Intel finds itself following the direct path to becoming a monopoly. Already now, the company produces 80 percent of the world's microprocessors for personal computers, and AMD -- the only other serious competitor -- lags far behind. Even when it comes to small niche companies, over the last few years, all other providers have gradually disappeared from the market. It is in no way exaggerated to say that the entire global chip-supported economy could become dependent on a single chip maker."

"Although the EU's antitrust fine comes too late, it's not too late for AMD....But it is still not certain whether the fine will deter Intel and lead it back to lawful business practices. The company has accumulated massive capital reserves, and its top executives even gloat about it. In theory, Kroes could have imposed a much higher penalty. She could have fined the company 10 percent of its sales proceeds, which were $37.6 billion (€27.7 billion) in 2008."

-- Josh Ward, 1:00 p.m. CET