This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.nytimes.com/2014/06/13/business/international/european-court-upholds-1-06-billion-fine-against-intel.html
The article has changed 6 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| European Court Upholds $1.44 Billion Fine Against Intel | European Court Upholds $1.44 Billion Fine Against Intel |
| (about 2 hours later) | |
| BRUSSELS — A top European court on Thursday upheld a record fine of 1.06 billion euros imposed five years ago on Intel, the world’s largest computer chip maker, by Europe’s top antitrust authority. | BRUSSELS — A top European court on Thursday upheld a record fine of 1.06 billion euros imposed five years ago on Intel, the world’s largest computer chip maker, by Europe’s top antitrust authority. |
| The European Commission levied the fine, equivalent to $1.44 billion, in 2009 after it accused the American company of abusing its dominance in the computer processor market by offering rebates to computer makers who used its chips more than other brands. | The European Commission levied the fine, equivalent to $1.44 billion, in 2009 after it accused the American company of abusing its dominance in the computer processor market by offering rebates to computer makers who used its chips more than other brands. |
| It was the highest single antitrust penalty that the authorities in Brussels have levied on a single company. | It was the highest single antitrust penalty that the authorities in Brussels have levied on a single company. |
| “Intel’s action against the Commission’s decision is dismissed in its entirety,” said the General Court of the European Union, the blocs second-highest court, in a summary of its ruling. | “Intel’s action against the Commission’s decision is dismissed in its entirety,” said the General Court of the European Union, the blocs second-highest court, in a summary of its ruling. |
| The court said it “considers that none of the arguments raised by Intel supports the conclusion that the fine imposed is disproportionate.” | The court said it “considers that none of the arguments raised by Intel supports the conclusion that the fine imposed is disproportionate.” |
| Intel still can appeal the case to Europe’s highest court, the European Court of Justice. | Intel still can appeal the case to Europe’s highest court, the European Court of Justice. |
| E.U. officials said they were emboldened by the ruling. | |
| “This is of course a significant judgment,” Antoine Colombani, a spokesman for the commission, said at a news conference. “It confirms that the commission was fully justified in pursuing the anticompetitive conduct in question in a major worldwide market.” The commission “will continue to vigorously pursue abuses of dominant positions,” he added. | |
| Intel had been appealing a decision where it was found to have offered illegal rebates to computer makers that used fewer or no chips made by its main competitor, Advanced Micro Devices. | Intel had been appealing a decision where it was found to have offered illegal rebates to computer makers that used fewer or no chips made by its main competitor, Advanced Micro Devices. |
| The commission, which had been investigating Intel since 2000 after a complaint by A.M.D., issued two sets of formal charges in 2007 and 2008. | The commission, which had been investigating Intel since 2000 after a complaint by A.M.D., issued two sets of formal charges in 2007 and 2008. |
| Intel has repeatedly said it had done nothing wrong and that its rebates and discounts were legal and a commonly used way of rewarding companies for purchasing its products in large quantities. | Intel has repeatedly said it had done nothing wrong and that its rebates and discounts were legal and a commonly used way of rewarding companies for purchasing its products in large quantities. |
| The European Union authorities began stepping up their pursuit of antitrust violators — and in particular cases in the technology sector — early last decade when the United States authorities backed away from pursuing their toughest penalties against Microsoft, settling the case instead. | The European Union authorities began stepping up their pursuit of antitrust violators — and in particular cases in the technology sector — early last decade when the United States authorities backed away from pursuing their toughest penalties against Microsoft, settling the case instead. |
| The decision to impose severe punishment on Intel was another reminder of how European regulators have emerged as some of the world’s staunchest enforcers of antitrust laws, and it was an early signal that global authorities were gearing up to raise the stakes for the biggest technology companies. | The decision to impose severe punishment on Intel was another reminder of how European regulators have emerged as some of the world’s staunchest enforcers of antitrust laws, and it was an early signal that global authorities were gearing up to raise the stakes for the biggest technology companies. |
| In the ruling on Thursday, the court fully endorsed the commission’s approach. The authorities had said that the way Intel granted so-called exclusivity rebates to gain the loyalty of manufacturers like Dell and Lenovo was anticompetitive and did not require further proof to be deemed illegal. | In the ruling on Thursday, the court fully endorsed the commission’s approach. The authorities had said that the way Intel granted so-called exclusivity rebates to gain the loyalty of manufacturers like Dell and Lenovo was anticompetitive and did not require further proof to be deemed illegal. |
| Despite the claims by Intel during its appeal, the commission did not need to show that such rebates “are capable of restricting competition on a case-by-case basis in the light of the facts of the individual case,” the court said. | Despite the claims by Intel during its appeal, the commission did not need to show that such rebates “are capable of restricting competition on a case-by-case basis in the light of the facts of the individual case,” the court said. |
| Exclusivity rebates “are, by their very nature, capable of restricting competition,” the court said. | Exclusivity rebates “are, by their very nature, capable of restricting competition,” the court said. |
| As part of its far-reaching powers to fine companies directly in antitrust cases, the commission is entitled to levy a penalty of up to 10 percent of a company’s annual global sales. Intel’s annual sales were $37.6 billion in 2008, and it could have faced a maximum penalty of close to $4 billion. | As part of its far-reaching powers to fine companies directly in antitrust cases, the commission is entitled to levy a penalty of up to 10 percent of a company’s annual global sales. Intel’s annual sales were $37.6 billion in 2008, and it could have faced a maximum penalty of close to $4 billion. |
| The European Union authorities imposed the second-largest single antitrust penalty, €899 million, on Microsoft in 2008, after the tech giant failed to comply with an order to provide other companies with enough information to work with its operating system. | The European Union authorities imposed the second-largest single antitrust penalty, €899 million, on Microsoft in 2008, after the tech giant failed to comply with an order to provide other companies with enough information to work with its operating system. |
| In 2012, the same court that upheld the penalty against Intel on Thursday handed a small victory to Microsoft by reducing the fine by €39 million, to €860 million, finding that the commission had miscalculated the amount. | In 2012, the same court that upheld the penalty against Intel on Thursday handed a small victory to Microsoft by reducing the fine by €39 million, to €860 million, finding that the commission had miscalculated the amount. |
| But, overall, Microsoft has been required to pay a total of more than €2 billion to European regulators as it faced numerous, separate penalties. | But, overall, Microsoft has been required to pay a total of more than €2 billion to European regulators as it faced numerous, separate penalties. |
| Critics of the approach in Europe — which has involved nearly decade-long battles with Intel and Microsoft — say it has had little concrete effect on technology markets. | Critics of the approach in Europe — which has involved nearly decade-long battles with Intel and Microsoft — say it has had little concrete effect on technology markets. |
| Intel has remained the world’s largest semiconductor manufacturer, even as consumers worldwide have shifted from personal computers to smartphones and tablets. | Intel has remained the world’s largest semiconductor manufacturer, even as consumers worldwide have shifted from personal computers to smartphones and tablets. |
| Under Brian Krzanich, who became Intel chief executive in 2013, the company is trying to expand into servers for large data centers, and new products like wearable computers, as well as phones and tablets. | Under Brian Krzanich, who became Intel chief executive in 2013, the company is trying to expand into servers for large data centers, and new products like wearable computers, as well as phones and tablets. |
| Still, Intel has lagged in the new categories, losing out to companies like ARM Holdings and Qualcomm. Revenue in the first quarter of this year was $12.8 billion, a drop of 8 percent from a year earlier. Gross margins and net income also fell. | Still, Intel has lagged in the new categories, losing out to companies like ARM Holdings and Qualcomm. Revenue in the first quarter of this year was $12.8 billion, a drop of 8 percent from a year earlier. Gross margins and net income also fell. |
| While Intel’s stock has increased 73 percent since 2009, ARM is up over 700 percent. | While Intel’s stock has increased 73 percent since 2009, ARM is up over 700 percent. |
| A.M.D., hurt worse than Intel by the move away from PCs, has since changed its focus to chips for things like graphics in games, and semiconductors for computer servers and embedded devices like digital signs. | A.M.D., hurt worse than Intel by the move away from PCs, has since changed its focus to chips for things like graphics in games, and semiconductors for computer servers and embedded devices like digital signs. |
| In the latest battle undertaken by Brussels, against Google, Joaquín Almunia, the European Union’s competition commissioner, has sought a settlement from the early stages of the investigation. Mr. Almunia, who has been formally investigating Google since 2011, has repeatedly explained that prolonged investigations risk failing to keep pace with changes in technology and markets. | In the latest battle undertaken by Brussels, against Google, Joaquín Almunia, the European Union’s competition commissioner, has sought a settlement from the early stages of the investigation. Mr. Almunia, who has been formally investigating Google since 2011, has repeatedly explained that prolonged investigations risk failing to keep pace with changes in technology and markets. |
| He still may struggle to wrap up the case before he leaves office at the end of October. | He still may struggle to wrap up the case before he leaves office at the end of October. |
| Neelie Kroes, Mr. Almunia’s predecessor, fined Intel in 2009 and ordered the company to cease offering rebates to computer makers that had helped it maintain a share of about 80 percent of the market for microchip sales and blocked A.M.D. from increasing its share beyond about 20 percent of that market. | Neelie Kroes, Mr. Almunia’s predecessor, fined Intel in 2009 and ordered the company to cease offering rebates to computer makers that had helped it maintain a share of about 80 percent of the market for microchip sales and blocked A.M.D. from increasing its share beyond about 20 percent of that market. |
| As a result of the ruling by Ms. Kroes, Intel had to change its business practices and pay the fine immediately, though that sum is being held in a bank account until appeals are exhausted. Intel currently has about $10 billion in cash and short-term investments. | As a result of the ruling by Ms. Kroes, Intel had to change its business practices and pay the fine immediately, though that sum is being held in a bank account until appeals are exhausted. Intel currently has about $10 billion in cash and short-term investments. |
| During its appeal, Intel accused European Union investigators of ignoring or minimizing evidence and imperiling its rights of defense. It said the commission failed to “make a proper note of its meeting with a key witness from one of Intel’s customers, who was highly likely to have given exculpatory evidence.” | During its appeal, Intel accused European Union investigators of ignoring or minimizing evidence and imperiling its rights of defense. It said the commission failed to “make a proper note of its meeting with a key witness from one of Intel’s customers, who was highly likely to have given exculpatory evidence.” |
| In what became a bitter and public fight, the commission then published e-mail messages and documents to back up its contention that the record fine against Intel was justified. | In what became a bitter and public fight, the commission then published e-mail messages and documents to back up its contention that the record fine against Intel was justified. |
| In one of these messages, from 2004, an executive from Dell warned his boss what would happen if chips from Advanced Micro Devices were used in Dell’s personal computers instead of chips from its main supplier, Intel. | |
| The scale of retaliation by Intel would be so severe, the executive wrote, that Dell would “have to bite and scratch to even hold” its 50 percent discount on the price of the Intel chips. He warned that using A.M.D. chips in computers for sales to companies would lead Intel to offer an even slimmer discount. | The scale of retaliation by Intel would be so severe, the executive wrote, that Dell would “have to bite and scratch to even hold” its 50 percent discount on the price of the Intel chips. He warned that using A.M.D. chips in computers for sales to companies would lead Intel to offer an even slimmer discount. |
| “Boss,” the executive wrote, Intel is “prepared for” all-out war “if Dell joins the A.M.D. exodus.” | “Boss,” the executive wrote, Intel is “prepared for” all-out war “if Dell joins the A.M.D. exodus.” |