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EU commission drops Intel probe

The European Commission said it is set to drop its antitrust investigation into Intel Corp, the No. 1 computer-chipmaker, after failing to find evidence the company was abusing its dominant position.

The commission's "preliminary assessment is expected to find that the complaints are unfounded," said Amelia Torres, a spokeswoman for Competition Commissioner Mario Monti.

An Intel spokeswoman in Munich declined to comment. In the US, Intel spokesman Tom Beermann didn't return a call seeking comment.

The commission, the 15-nation EU's executive agency, opened the investigation in April after complaints the US company was using loyalty programs and rebates to prevent customers from going to competitors. Intel's main rivals are Advanced Micro Devices Inc and Taiwan's Via Technologies Inc.

"The case hasn't got merit," said Ashok Kumar, analyst at US Bancorp Piper Jaffray, who has an "outperform" rating on Intel shares. "Intel is fairly cognizant of potential infractions and they steer clear of that."

Intel could have faced a fine as high as 10 percent of sales if found guilty. That threat still hangs over Microsoft Corp, which the commission is investigating for allegedly abusing its dominance of operating system software.

"This is not like the Microsoft investigation," Kumar said. "This is more of a sideshow."

Intel, based in Santa Clara, California, controls 84 percent of the European microprocessor market, which generated a quarter of the company's US$34 billion in sales in 2000.

The commission looked at whether the way Intel licenses the design of the connections that link chips with other computer components discriminates against competitors, according to the New York Times, which reported earlier the probe would be dropped.

Advanced Micro spokesman John Greenagel didn't return calls seeking comment.

Intel shares fell US$0.37 to US$34.67 yesterday. They have climbed 47 percent since declining the day the probe was announced.

The ending of the probe comes as EU antitrust investigators approved Hewlett-Packard Co's proposed US$23.8 billion purchase of Compaq Computer Corp.

That investigation assessed whether H-P would get an unfair advantage through its joint development of the Itanium processor with Intel and by selling its printers jointly with Compaq's personal computers.

Monti's team concluded that H-P and Compaq would be unable to foreclose competitors' access to the processor and that it was in H-P and Intel's interest to guarantee unrestricted access.

Advanced Micro tried in October to get a federal court to release sealed documents from an old antitrust case against Intel to bolster the EU complaint.
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