The European Commission has found that Intel abused its dominant position on the market for central processing units (CPUs), thus breaching Article 82 of the EC Treaty. This decision follows an eight year investigation, which commenced after Intel’s main competitor, Advanced Micro Devices (AMD), complained to the Commission.

The Commission concluded that Intel breached EC competition rules in two ways. First, Intel offered rebates to computer manufacturers who bought all or almost all of their CPUs from Intel, thus making it very difficult for competitors to gain market access. Second, Intel made direct payments to computer manufacturers to delay the launch of products containing AMD’s CPUs, and to reduce the sales avenues available to these products. During the investigation, it also emerged that Intel made direct payments to a major retailer provided that it only sold computers which contained Intel’s CPUs.

The EU fined Intel €1.06 billion for its behaviour and ordered the US IT giant to cease these illegal practices immediately. This is the largest fine the European Commission has issued to an individual company for a breach of competition law and illustrates the tough stance the Commission is taking against such infringements. The fine represents 4.15% of Intel’s 2008 turnover and reflects the gravity of the infringements and the fact these lasted for a period of five years. Intel has confirmed its intention to appeal the Commission’s decision.

Competition law compliance should be an important component of risk management strategy for every business. The Intel case shows that abusive behaviour can lead to severe financial consequences, which is something every business should be wary of, particularly in the current economic climate as businesses struggle to remain profitable and seek ways to remain competitive.