Brussels publishes Intel emails in anti-trust case (Roundup)

Sep 21, 2009, 12:13 GMT

Brussels - The European Commission on Monday published emails and documents it says demonstrate chip maker Intel and major computer makers and retailers connived to shut a rival firm out of European markets.

In May the EU's executive in Brussels fined Intel a record 1.06 billion euros (1.56 billion dollars) after accusing it of violating the EU's anti-trust rules in its commercial rivalry with Advanced Micro Devices (AMD).

The penalty imposed on Intel was the largest single fine ever imposed by the EU on a private company for anti-competitive practices, smashing the previous record of 899 million euros levied on US software giant Microsoft in February 2008.

Intel at the time strongly denied all charges and announced that it would challenge the fine in the European Court.

But emails exchanges between Intel and computer manufacturer executives demonstrate that 'Intel abused its dominant position in the x86 CPU market by implementing a series of conditional rebates to computer manufacturers and to a European retailer and by taking other measures aimed at preventing or delaying the launch of computers based on competing products (so-called 'naked restrictions'),' the commission said Monday.

In an October 2004 email from Dell to Intel, a Dell executive admitted that 'Intel is increasingly uncompetitive to AMD which results in Dell being uncompetitive. We have slower, hotter products that cost more across the board in the enterprise with no hope of closing the performance gap for 1-2 years.'

Despite recognizing AMD's superiority, Dell continued to use Intel as a supplier because of favourable, but according to the commission illegal, business conditions.

The commission published more emails and documents suggesting that Intel had cut similar deals with Hewlett-Packard (HP), NEC, Lenovo and Acer.

HP admitted during the course of the investigation that it received rebates from Intel, between November 2002 and May 2005, on condition that it purchase no less than 95 per cent of its CPU needs for business desktops from Intel.

'PLEASE DO NOT ... communicate to the regions, your team members or AMD that we are constrained to 5 per cent AMD by pursuing the Intel agreement,' an HP executive wrote in an email dating back to July 2002.

The fact that AMD posed a major threat was also acknowledged by Intel itself in an internal email dating back to 2004.

'(AMD's) Opteron (processor) is real threat today? Opteron-based single Workstation benchmarks beat (Intel's) Xeon in all cases,' Intel officials wrote at the time.

The commission's investigation also found that Intel had effectively bribed Germany's Media Markt to stop retailing AMD-based computers.

Jonathan Todd, spokesman for EU Competition Commissioner Neelie Kroes, said his office had decided to publish the documents because of 'suggestions that our decision was based on allegations rather than facts.'

These 'interesting facts are now available for all to see,' Todd said.

Asked whether Intel had bowed to the commission's demand that it stop such illegal practices, the spokesman said only that officials in Brussels were 'actively monitoring Intel's compliance' with their May decision.