Intel Corporation: European Union Antitrust Case
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Case Code: ECON030 Case Length: 25 Pages Period: 2001-2009 Pub Date: 2009 Teaching Note: Not Available |
Price: Rs.400 Organization : Intel Corporation Industry : Computers, IT and ITeS Countries : USA Themes: Pricing, Competition |
Abstract Case Intro 1 Excerpts
"Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years. Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated."
- Neeli Kroes, Competition Commissioner, European Commission, in May 2009.
"We do not believe our practices violated European law. The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not."
- Paul Otellini, CEO, Intel Corporation, in May 2009.
"[The Commission] wanted to send a clear signal that it is taking a leadership role in enforcing competition rules against dominant companies in the technology markets."
- Michael Reynolds, antitrust partner, Allen & Overy, commenting on EC's ruling, in May 2009.
Introduction
On May 13, 2009, the European Commission (EC) slapped a fine of € 1.06 billion on California-based Intel Corporation (Intel), the largest semiconductor company in the world, for violating the antitrust policies of the European Union (EU).
The EC accused Intel of engaging in anti-competitive business practices in a bid to gain dominance in the microprocessors market by excluding competitors like Advanced Micro Devices (AMD). It said that Intel had misused its dominant position in the market, "with the aim of excluding its main rival from the market."6 One of the major charges against Intel was that it offered partial or full rebates to Personal Computer (PC) manufacturers including Dell Inc. (Dell), Acer Inc.8, the Lenovo Group, Hewlett-Packard Company, etc. on the condition that they committed themselves to buying all the x8611 microprocessors from Intel. The company also allegedly made payments to a German retailer, Media-Saturn Holding12 (Media-Saturn), on the condition that it stocked only PCs equipped with Intel's x86 microprocessors. The EC said that this practice had prevented customers from choosing alternative products...
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