Several credible sources report that the European Union is likely to find Intel guilty of anti-competitive behavior this week. The firm could face the first ever two-billion dollar fine for such offenses.

The nine-year old case followed complaints by rival firm Advanced Micro Devices that Intel had given financial incentives in the form of rebates to PC manufacturers and retailers to carry Intel processors.

In and of itself, that’s not necessarily a breach of European regulations. However, it can be considered anti-competitive when carried out by firms which have dominant market positions. Intel has a reported worldwide share of more than 80% in the processor market.

Intel is also charged with more flagrant breaches of the rules, including that it specifically told some manufacturers they could only carry particular brands of processors (such as AMD) on a set proportion of their machines. It’s also alleged Intel sold processors at below cost price to prevent rival firms gaining a foothold in the market.

Reuters says it learned yesterday that the EU will rule against Intel and announce a punishment on Wednesday. As well as ordering Intel to halt the illegal elements of the rebate program, the EU will, according to the sources, also issue a fine. The maximum possible fine is 10% of a firm’s annual revenues which, based on Intel’s 2008 sales, would mean a $3.8 billion penalty.

Bloomberg notes that the standard penalty is 30% of the relevant sales across the time of the violation. Based on Intel’s European figures, that would be $2.1 billion, though the EU has the right to fine more than the standard penalty if it feels extra deterrence is necessary.

Even the $2.1 billion figure would shatter existing records. At the moment the highest penalty paid for a single offense under European competition laws was the $1.16 billion paid by Microsoft, and in the case the fine itself was ‘only’ $497 million (the rest was added later as punishment for failing to comply with the orders accompanying the fine).

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Entry was posted on Monday, May 11th, 2009 at 2:56 pm under Intel, Legal.

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