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Sat, Jul 19, 2008 - Page 10 News List

EU charges Intel with coercion and bribery

‘ABUSIVE CONDUCT’ Among the charges leveled by the European Commission was that Intel paid bribes to a firm to delay the launch of a product using AMD chips

DPA, BRUSSELS , NEW YORK, SAN FRANCISCO AND FRANKFURT, GERMANY

European regulators charged that US chipmaker Intel used coercion and bribery to unfairly gain market advantage in Europe late on Thursday.

The European Commission said that it had sent another so-called “statement of objections” to Intel alleging it has tried to exclude its leading competitor, Advanced Micro Devices Inc (AMD), from the x86 central processing unit (CPU) market.

The action follows a similar warning sent to the company in July last year.

Without naming other companies involved, regulators said in a statement they had reached a “preliminary conclusion” that Intel has engaged in another three types of “abusive conduct.”

The commission said Intel had provided “substantial rebates to a leading European personal computer retailer” to sell only Intel-based PCs. It had paid bribes to a manufacturer to delay the launch of a product using AMD products and also paid “substantial rebates” to the same company conditional on its buying all of its CPU units from California-based Intel.

The European Commission gave Intel eight weeks to reply and attend an oral hearing, and reserved the right to levy fines. It said each charge in and of itself was serious, but taken together they “reinforce each other and are part of a single overall anti-competitive strategy aimed at excluding AMD or limiting its access to the market.”

Intel said it was disappointed by the new charges, adding it believed the commission supported AMD’s position. It said it has always conducted itself legally and with a sense of fair competition.

Intel said the rebates gave lower prices to consumers and it was convinced it could rebut the Commission’s charges as unfounded.

Separately, AMD replaced its chief executive Hector Ruiz on Thursday, appointing its president and chief operating officer Dirk Meyer in his place.

The move was announced as AMD, which has struggled in recent years to compete with sector leader Intel, reported a loss of US$1.2 billion on the quarter. AMD’s revenue rose to US$1.35 billion from US$1.31 billion, but it was short of the US$1.45 billion expected by Wall Street.

AMD shares were down US$0.20, or 3.8 percent, to US$5.10 in after-hours trading. AMD’s stock was above US$40 as recently as 2006 and the resulting fall has vaporized US$20 billion in shareholder wealth.

Ruiz, 62, had been chief executive since 2002 and will continue to serve as executive chairman, focusing on a previously announced plan to develop a new manufacturing strategy that is expected to reduce costs. Ruiz had been one of the few Hispanic chief executive’s of a top US company.

Under his tenure, AMD rose to present its greatest challenge to Intel when it launched the Opteron line of chips in 2003. But delays in introducing the chip’s successors and a bad US$5.6 billion purchase of graphics chip maker ATI Technologies hit the company’s cash flow and profits, forcing it to sell an 8.1 percent stake to the Abu Dhabi government’s investment arm last November.

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