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7/27/2007
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Intel Defends Itself Against The EC's Anti-Competitive Claims

If the commission finds fault against Intel, the company could be required to cease some of its business practices and pay fines.

Intel went on the defensive Friday against European Commission accusations that the chipmaker abused its dominant position in the microprocessor market and used anti-competitive practices against its rival Advanced Micro Devices.

The EC on Thursday sent Intel a Statement of Objections notifying the company the commission blames Intel for acting improperly in trying to exclude AMD from the market. Intel has 10 weeks to reply to the legal document and has the right to an oral hearing. If the commission finds fault against Intel, the company could be required to cease some of its business practices and pay fines.

In a statement issued Friday, Intel denied the charges. "We are confident that the microprocessor market segment is functioning normally and that Intel's conduct has been lawful, pro-competitive, and beneficial to consumers," the company said.

The EC listed three practices on the part of Intel that appeared to be anti-competitive. The first was providing substantial rebates to equipment manufacturers conditional on them obtaining all or the great majority of the processors from Intel.

Second, Intel in a number of instances made payments to induce a manufacturer to either delay or cancel the launch of a product line incorporating an AMD-based processor. And finally, Intel offered processors below cost in bids against AMD for customers in the server market.

"These three types of conduct are aimed at excluding AMD, Intel's main rival, from the market," the EC said in a statement. "Each of them is provisionally considered to constitute an abuse of a dominant position in its own right. However, the commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anti-competitive strategy."

In responding to the EC's findings, Intel also took a swipe at AMD, which has gained market share against Intel over the last couple of years to only see it evaporate through aggressive pricing and product releases from Intel. AMD has since reported hundreds of millions of dollars in losses over the last three quarters.

"The evidence that this industry is fiercely competitive and working is compelling," Intel said. "When competitors perform and execute the market rewards them. When they falter and underperform the market responds accordingly."

AMD has lawsuits pending against Intel in courts in the United States, South America, and other jurisdictions.

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