Intel comes out swinging against $1.3bn European fine

Intel is petitioning the EU's General Court to overthrow the massive fine imposed upon it by the European Commission back in 2009, saying that the case against it was fatally flawed from the get-go.

"The quality of evidence relied on by the Commission is profoundly inadequate," Reuters reports Intel lawyer Nicholas Green telling the court's panel of five judges, echoing assertions made when the fine was first announced. "The analysis is hopelessly and irretrievably defective."

Intel has a lot riding on the appeal – but a bit less than when the fine was imposed in May 2009: the €1.06bn penalty converted to $1.5bn then, but has dwindled to $1.34bn as of today, what with the eurozone's financial sinkage.

The fine was the result of a long investigation that concluded that Intel had indulged itself in anti-competitive behavior, illegally using rebates and contract conditions to squeeze AMD out of the European PC market.

At the announcement of the May 2009 fine, EU Competition Commissioner Neelie Kroes appeared confident that the decision would hold up on appeal, saying, "I'd like to draw your attention to Intel's latest advert calling them sponsors of tomorrow, now they are sponsors of the European taxpayer."

Immediately after the fine was revealed, Intel CEO Paul Otellini let it be known that Intel had no intention of accepting the decision without a fight. "We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace," he said. "There has been absolutely zero harm to consumers. Intel will appeal."

And now – over three years later – the formal appeal has begun.

Intel declined to comment on the case, but did provide The Reg with a copy of the 84-page appeal document filed with the court. That document reminds us that the entire imbroglio began when AMD filed a complaint to the EC in October 2000, alleging anti-competitive moves by Intel. AMD followed up that original complaint with supplementary filing in November 2003.

The EC launched its investigation in May 2004. Over the next few years, Dell, HP, Lenovo, and NEC – which all participated in what the EC ruled were Intel's anti-competitive rebate plans – became involved in the EC's fact-finding efforts. After a series of back-and-forth parries between Intel and the EC, the decision against Intel was laid down on May 13, 2009.

Attempting to summarize 84 pages of tightly packed legalese will necessarily leave out some important details, but will give it a shot, in any case. At its core, Intel argues that the fine is far larger than it should be, that it didn't abuse its dominant market position "either intentionally or negligently" in violation of the EC's Article 82 anti-competitive rules, and that the EC misapplied its own geographical guidelines and "took irrelevant considerations into account."

For its part, the EC argues that the fine is, well, just fine, and that Intel's arguments in the matter of Article 82 are "unsustainable." From the EC's point of view, settled case law indicates that intentionality or negligence can be judged to have occurred when the alleged offender "cannot be unaware of the anti-competitive nature of its conduct."

The EC goes on to argue that "whether Intel tried to conceal its conduct or not is immaterial to the issue of intent or negligence. However, the Commission points out that Intel's attempts to camouflage its unlawful practices also show that Intel was aware of the abusiveness of its conduct."

Finally, the EC's argument asserts that it did, indeed, hew to its own guidelines, that its investigations and findings were geographically appropriate, and that it was entitled to take Intel's attempts to conceal its anti-competitive actions into account "when assessing the gravity of the infringement."

Both Intel and the EC have allies in this dispute. In Intel's corner sits the lobbying group Association for Competitive Technology, an "international grassroots advocacy" with offices in Washington DC and Brussels, which counts Intel along with eBay, Microsoft, Oracle, and VeriSign among its "Sponsor Members". Supporting the EC is the 141,780-member French consumer-advocacy group UFC-Que Choisir.

While we wait for this appeal to drag its way through the General Court, we should remind ourselves that even if Intel does get its fine repealed or reduced, it has already paid a price for what the EC branded as anti-comptetive chicanery. In November 2009 it settled a separate lawsuit filed by AMD, forking out a cool $1.25bn to do so.

When discussing the AMD settlement and how Intel would change its ways in the future, Otellini denied engaging in any anti-competive practices. "We won't do those things," he said, "we haven't done those things, and therefore there's no difference carrying forward."

No difference, of course, except being out $1.25bn already, with another $1.34bn still in question. ®