Killed EU Antitrust Fine Could Still Come Back To Haunt Intel

Intel may still face a fine from the European Commission (EC) after the trade bloc's General Court annulled a historical antitrust verdict and its associated penalty last year because it seems some findings from the original case were not overturned.

In January last year, the EU General Court nullified the EC's 2009 findings that Intel had abused its dominant position in the processor market, and overturned the €1.06 billion ($1.2 billion) fine that had been imposed against the chipmaker.

However, it emerged from details in Intel's annual report recently filed with the US Securities and Exchange Commission (SEC) that the EC appealed the General Court's decision to the Court of Justice in April 2022, as we reported at the time.

This appeal centers on the fact that the General Court's decision had not annulled the EC's findings in 2009 that Intel had made payments intended to prevent the sales of specific rival products. With that in mind, Intel said the EC has reopened its administrative procedure to "determine a fine against Intel based on that alleged conduct," although no date has apparently been fixed for the hearing.

The case itself goes way back, as The Register reported last year, to Intel's rival chipmaker AMD, which complained in 2000 and again in 2003 that Intel was engaging in anti-competitive activities by offering rebates to hardware partners if they used Intel's x86 chips instead.

Readers with long memories will recall that 2003 saw the introduction of AMD's Opteron processors, which extended the x86 architecture to 64-bit computing while also maintaining compatibility with existing 32-bit software without taking a hit on performance.

At the time, Intel was still trying to convince everyone that the Itanium architecture was the future and initially resisted bringing its Xeon chips into the 64-bit arena, giving AMD a clear advantage, yet AMD was unable to attract some vendors into using its chips.

In response to AMD's claims, the EC started an antitrust investigation in 2004 that concluded in 2009 with the €1.06 billion penalty. The EC said its evidence led to the conclusion that conditional rebates and payments offered by Intel "induced the loyalty of key OEMs" and diminished competitors' ability to compete on the merits of their own x86 chips.

AMD also filed its own antitrust case against Intel, which was settled in 2009 with the two signing a cross-licensing agreement and the chip giant paying its smaller rival $1.25 billion.

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Intel appealed against the EU judgement, first in 2012 and then again in 2017, which led to the overturning of the verdict last year with the General Court ruling that the analysis carried out by the EC had failed to establish to the requisite legal standard that the rebates were having an anti-competitive effect.

The fine imposed on Intel was repaid in February. Not satisfied with that, Intel filed a claim with the General Court for €593 million ($623.5 million) in interest charges on the value of the fine.

However, with the reopening of the EC's administrative procedure regarding its alleged conduct in making payments to stifle competition, Intel warned in its latest annual report: "Given the procedural posture and the nature of this proceeding, we are unable to make a reasonable estimate of the potential loss or range of losses, if any, that might arise from this matter."

If another fine is imposed, it would be a further blow to the chipmaker, which reported a net loss of $700 million and revenue down by 32 percent in its Q4 2022 results last week.

The company has also warned of layoffs, although only a few hundred have been notified so far, and also reiterated its intention to cut spending by $3 billion during 2023.

This month, Intel announced the cancellation of a $700 million research and development facility for liquid cooling technology, canned a $200 million development center planned for Haifa, Israel, and also cast doubts over an advanced semiconductor packaging and assembly facility that the company has been planning to construct somewhere in Italy. ®