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EU legal eagle: Euro court should review Intel's €1.6bn fine

Chipzilla market share WAS overstated, claims Advocate General

An EU High Court Advocate General has recommended a review of the case that saw Intel slapped with a record fine after it was found to have coerced OEMs to avoid using rival companies' x86 CPUs.

Back in 2009, the EC imposed a €1.06bn penalty - 4.15 per cent of Intel's turnover - following a multi-year legal battle but Chipzilla has since twice appealed for the decision to be quashed.

An opinion offered by the Advocate General, Nils Wahl, has offered encouragement to Intel's legal eagles; Wahl said a ruling by the EU's General Court — which dismissed Intel's first appeal — was flawed and needed to be sent back to the General Court for review.

Wahl's non-binding opinion stressed the dismissal of Intel's appeal was delivered on iffy legal ground, and that the EU's General Court should have another look at the decision because it had overstated the degree to which Intel's rebates to OEMs had distorted the market.

Additionally, Wahl noted that Intel's actual agreements with HP and Lenovo – two of the OEMs which Intel had awarded the conditional rebated (Dell and NEC were the others) – did not prevent those companies from purchasing plentiful amounts of x86 processors from rival manufacturers such as AMD, which brought the initial complaint.

He added that Intel's market share was contracting towards the end of the ten year period that the General Court looked at, and that in 2007 it simply did not have enough market share for its activities to lessen competition.

Wahl's opinion comes ahead of a European High court judgment, expected early next year, to whom the case has been escalated as Intel continues to fight the claim that in awarding conditional rebates to companies based on those companies purchasing the majority of their x86 CPUs from Intel, they were unfairly damaging competitiveness.

For the 10 years ending 2007, Intel held 70 per cent of the global market share in x86 CPUs, according to the original ruling against Intel, which didn't bother to answer whether it was necessary to distinguish three separate x86 CPU markets in desktop PCs, notebooks and servers.

Intel's conflict with AMD - the only other major x86 manufacturer - is longstanding, with Intel accused of suppressing access to its rival's chips in the first complaint AMD filed to the EU in 2000.

It wasn't until May 2004 that the European Commission began to investigate these issues, and in 2009 found that Intel had indeed "implemented a strategy aimed at foreclosing a competitor, AMD, from the market for x86 CPU microprocessors."

In his background to the proceedings, Wahl noted how prior to the turn of the millennium "there were several manufacturers of x86 CPUs. However, most of these manufacturers have since exited the market. According to the decision at issue, Intel and AMD are essentially the only two companies still manufacturing x86 CPUs."

Intel scored an own goal is supporting OEMs to integrate its chips - some would say this directly accelerated the collapse of the local PC builder community, with the likes of Elonex, Evesham, Tiny and Time going bust as they were unable to compete with the might of the multi-nationals.

In 2009, the European Commission found that in its rebates offered to the four aforementioned businesses, Intel had "induced the loyalty of the key OEMs" which "significantly [diminished] competitors’ ability to compete on the merits of their x86 CPUs. As a consequence, Intel’s anti-competitive conduct resulted in a reduction of consumer choice and in lower incentives to innovate" and it subsequently fined Intel €1.6bn.

Intel had not responded to The Register at the time of publication. ®

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