E.U. Preps Possible Legal Action Against Intel

European Commission antitrust officials investigating computer chip maker Intel presented what they believe is a watertight argument for prosecuting the firm to an internal panel of so-called devil’s advocates on Tuesday, according to a person familiar with the investigation.

Holding their case up to the scrutiny of the panel may indicate that the officials on the case are confident enough to push ahead with legal action. The panel was recently introduced into the antitrust investigation process in order to prevent poorly prepared cases from turning into formal legal proceedings.

Intel has been under investigation by the commission for the past five years. With a global market share in the computer chip market of around 80 percent, the company dwarfs its nearest rival, Advanced Micro Devices, which accounts for the bulk of the remaining sales of chips around the world.

Neither Intel nor the European Commission was immediately available to comment.

Thomas M. McCoy, AMD’s executive vice president of legal affairs, said in a recent interview he is confident the European Commission will take action to stop Intel from abusing its dominance in the market.

“The Intel investigation is coming to a close,” he said, adding that he was confident it would result in Neelie Kroes, the competition commissioner, issuing a charge sheet, known as a statement of objections to the company.

“I am optimistic she will push ahead with the lawsuit because she is independent from political pressure, both Intel and AMD are big employers in Europe, and because unlike other antitrust cases, there are no complicated intellectual property issues at stake in this case,” McCoy said.

Last year, the European Commission launched surprise visits on Intel’s offices in Europe, confiscating documents in its hunt for evidence of illegal behavior.

Last month, the European regulator took over a separate investigation being conducted by German antitrust officials, into claims that Intel was forcing Europe’s biggest computer retailer, Media Markt, to stock only computers fitted with Intel chips.

Consumer groups have complained to the regulators that computer buyers are getting less choice as a result of Intel’s tactics, which include granting rebates in return for loyalty from PC manufacturers.

AMD’s McCoy said Intel uses the threat of price increases to persuade PC makers like Sony and Hewlett-Packard not to build PCs around AMD’s chips.

“Sony used to have a model running on AMD chips at any given price range, but then they went 100 percent Intel. Ultimately the consumer loses through reduced choice,” he said.

The devil’s advocate panel includes the competition department’s chief economist, Damien Neven, along with colleagues in the department who aren’t involved in the Intel case.

If the draft case against Intel is supported by the panel, the investigating team will propose that Kroes issue a statement of objections to the company for the first time in the five years it has spent investigating Intel.

-Paul Meller, IDG News Service (Brussels Bureau)

Related Link:

• E.U. Expands Intel Investigation

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