Intel antitrust ruling could open civil cases floodgates

Intel’s record $1.7 billion fine for breaching competition laws will open the floodgates for civil actions, a competition lawyer has said.

The European Commission issued its biggest ever competition fine to Intel, after ruling that Intel made secret payments and offered kickbacks to retailers in exchange for them exclusively stocking Intel products and not those of rivals.

The EU also said Intel offered rebates to computer manufacturers, to encourage them to use its chips rather than AMD’s and to delay launches of products featuring its rival’s technology.

But Intel, which said it will appeal the ruling, could face even more payouts if Intel competitors, such as AMD, take civil cases on the back of the Commission’s regulatory action, according to Alan Davis, an expert in competition law at Pinsent Masons, the law firm behind OUT-LAW.COM.

“This will open the floodgates for competitors to sue,” said Davis. “There was a complainant in this case, AMD [Advanced Micro Devices], and without question they and other competitors will pursue a case for damages.”

“The fine goes to the European Commission’s coffers, not to the competitors who suffered damage to their businesses because of Intel’s anti-competitive practices,” he said. “What is likely to happen is that action will be started and a massive settlement will be made.”

Davis said the fine heralded a new era of tough anti-competitive enforcement in Europe, a sentiment that is being echoed in the US under Barrack Obama’s administration.

Gartner analyst Martin Reynolds also notes that AMD will not profit from this ruling, and foresees future civil cases.

“Intel will pay its fine, and carefully inspect its sales relationships to protect against risky influence. AMD does not receive any money from the fine, which accrues to the EU tax budget. And Intel’s greatest challenge will remain market growth, not market share,” said Reynolds.

“However, the decision paves the way for civil cases against Intel, with the main case due to go to trial in Delaware in 2010,” he added, referring to a case filed by AMD against Intel back in 2005. A

MD, unsurprisingly, welcomed the EC’s ruling: “Today’s ruling is an important step toward establishing a truly competitive market,” said Dirk Meyer, AMD president and CEO.

AMD’s statement went on to list all the antitrust cases that Intel has been involved in. In 2008, Korea issued Intel a $25.4 million fine for “abuse” of its dominant position. In 2005, the Japan Fair Trade Commission (JFTC) ruled that Intel had violated the country’s anti-monopoly laws by illegally forcing full or partial exclusivity with five Japanese PC makers. A high-profile case in the US courts is still ongoing.

“Intel has so far failed to convince any antitrust enforcement agency that its business practices are lawful and pro-consumer,” AMD’s statement said.

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