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Intel May Face EU Antitrust Charges - Update [INTC]
7/27/20071:54:34 AM Chip King Intel Corp. (INTC) may soon be embroiled in anantitrust battle with the European regulators, and the legal processcould get as complex as the European Union's drawn out battle withMicrosoft Corp.
The EU competition watchdog is planning to bringup formal charges against the chipmaker, for engaging in uncompetitiveactivity. The commission will charge Intel for offering illegal rebatesto computer makers, to lure sales from rival Advanced Micro DevicesInc. The Regulators may move Friday to charge Intel with violation ofanti-trust laws. A statement of objections, or an official chargesheet, was sent yesterday, according to a EU spokesman.
Thedecision to formally charge the company follows a six-yearinvestigation into allegations of illegal discounts topersonal-computer makers. AMD has always been cribbing about Intel'sbusiness practices and rebates and filed its own anti-trust suitagainst the bigger rival in 2005. The company has been urging theregulators to intervene.
Intel has commanded the lion's share ofthe Chip market, but AMD managed to boost its market sharesignificantly between 2003 and 2006. Last summer however, Intel made acomeback with a string of improved products and managed to regainmarket share, particularly in the first quarter of this year.
Lastweek, AMD said its unit sales were up 38% in the second quarter, fromthe previous quarter, signaling that it had resumed market share gains.
Intelwill have two months to respond to formal charges and a final decisioncan be appealed at European courts. The EU can fine companies up to 10%of annual sales for breaking antitrust rules. The biggest antitrustfine levied by the commission was 497 million euros against Microsoftfor abusing its leadership in PC operating systems.
Intel hasalso faced antitrust probes in Japan and Korea. In April 2005, Japan'santitrust authority ordered the chipmaker to remove clauses thatrestrict Japanese computer makers from using other chips. In February2006, Korean officials raided Intel offices.
Intel has maintained that its practices are fair and lawful. The company could not be reached for comment.
Intel stock closed Thursday's trade at $24, down 50 cents. |
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