Intel has abused its position of dominance in an attempt to force AMD out of the x86 chipset market, the EU's European Commission charged in a statement of objection, which the commission confirmed on Friday.
The commission claims that Intel provided massive rebates to computer makers if they bought the vast majority of their chips from Intel, paid off manufacturers to delay or cancel AMD-based products, and sold chipsets below cost to beat AMD on price.
Intel general counsel Bruce Sewell countered the charges in a statement, saying the market is "functioning normally and ... Intel's conduct has been lawful, procompetitive, and beneficial to consumers." Pointing out that the statement of objection is a preliminary finding, Sewell said AMD's troubles are the normal result when competitors "falter and underperform."
Giuliano Meroni, AMD president for Europe, Middle East, and Africa, said, "This is a moment of truth for the entire I.T. industry. We are confident that this statement of objection will be a catalyst in opening the global microprocessor markets for the benefit of consumers and PC companies alike."
Action 'Enormously Important'
A month ago, AMD CEO Hector Ruiz told an antitrust group that AMD competes on a daily basis with "an abusive monopolist. It makes no difference whether you are just as efficient -- or even more efficient -- than they are."
The news of the European Commission action is "enormously important to the world and to American consumers," said Albert A. Foer, president of American Antitrust Institute, based in Washington, DC, in a telephone interview.
"If AMD's allegations are sustained, than Intel has been engaged in a global strategy to monopolize the microchip industry," he said. If AMD is left "severely crippled," Foer said, "the world is left with single player for a very important commodity. Innovation depends on a competitor and the allegations are that the dominant player has abused its power to keep AMD from gaining market share."
Foer said the allegations go far beyond an initial complaint. The statement of objection is the culmination of a six-year review by "very competent staff" who have been under pressure by the courts to document carefully, Foer said. "One suspects they've done their homework."
Intel has 10 weeks to respond to the objections and might make an oral presentation and appeal to the Court of First Instance. That court, Foer said, has been a "harsh critic of the directorate" bringing the charges. "The directorate has to make a strong case," he said, adding that the charges have a fair amount of credibility.
If Intel loses its appeals, the EU could fine the company 10 percent of its annual sales. In addition, if Intel is eventually found to have violated antitrust laws, the impact on the PC industry and consumers could be dramatic, Foer noted, as AMD allegedly made technological breakthroughs but was unable to capitalize on them because of Intel's tactics.
"In the absence of enforcement, AMD wouldn't have enough market share to spread the capital investment costs." Foer said. In that case, "they'll have to withdraw from competing with Intel on an R&D basis." That R&D competition, he concluded, is a tremendous benefit to the consuming public.