1 Post No. EU antitrust officials raid Intel, computer retailers

European Union antitrust regulators raided Intel Corp. offices and computer retailers on Tuesday as part of an investigation into whether they have followed rules that ensure competition in the market for computer chips, the European Commission and Intel said.

Intel spokesman Chuck Molloy confirmed that the company's Munich, Germany, office had been raided and said the company would co-operate with the investigation.

European Union antitrust regulators are looking into whether Intel used its market dominance to stifle competition in microprocessors.
(Jae C. Hong/Associated Press)

Europe's largest consumer electronics retailer, Germany-based Media Markt, said it was also raided, as was Britain's DSG group, which owns Dixons, Currys, PC City and PC World.

The surprise inspections were the EU's first major move in response to complaints from smaller rival Advanced Micro Devices Inc., which alleges Intel pressed major stores to avoid computers using AMD chips.

Intel, the world's biggest chip maker, is already facing formal EU charges of monopoly abuse for below-cost customer rebates and pricing that the EU says undercut AMD and discouraged manufacturers from building computers with the smaller firm's chips.

The raids focused on the final link in the supply chain — the stores that sell computers directly to users. AMD claims a wide range of bullying tactics by Intel shut out all of the larger firm's rivals.

The EU said there was no strict deadline for deciding whether to file charges or drop the case. EU fines can go as high as 10 per cent of a company's yearly global revenue. Last year, Intel's revenue amounted to $6.98 billion.

Intel, based in Santa Clara, Calif., sells more than three-quarters of all microprocessors, the brains of computers, that use Microsoft Corp.'s Windows operating system.

The EU formally charged Intel last July — six years after it first started looking at the company — alleging the company gave "substantial rebates" to computer makers for buying most of their x86 central processing units, or CPUs, from Intel.

The EU executive also accused Intel of making payments to manufacturers to get them to delay or cancel product lines using AMD chips and that it sold its own chips below average cost to strategic server customers — such as governments and universities — when bidding against AMD-based products.

Below-cost or predatory pricing may be good for shoppers in the short term, but in the EU view, it ultimately harms consumers by killing off rivals that allow more choice and innovations.

EU officials also looked at whether Intel had urged Media Markt not to sell computers using AMD chips. The chain, which is owned by German retailer Metro AG, has more than 360 stores in Germany, France, Belgium, Austria, Switzerland, Poland, Hungary, the Netherlands, Italy, Spain and Greece.