Intel positions artillery to fight $1.45 billion EU fine

Santa Clara (CA) – Intel’s chief executive officer used a conference call with journalists this morning to respond to the $1.45 billion dollar antitrust fine imposed by the Europe Commission (EC) today. Paul Otellini, quite apparently dazzled and shaken in his comments, made it clear that Intel was unhappy with the decision and that it would use the appeals process to attack the findings. He indicated that, if upheld, the ruling will impact the sales and marketing staff in Europe.

Otellini said that Intel has only received a 3 page summary of the EC’s decision, but is waiting for the entire document, which includes more than 500 pages. Intel will have to pay or negotiate the $1.45 billion fine within 90 days and, according to the executive, the company will “obide to everything”, but will go through the appeals process nevertheless.

He indicated that pursuing the appeal had not so much to do with the fact that Intel is upset, but with the plain thought of getting more evidence into the case. Otellini stated that the 9-year case relied virtually only on a complaint from AMD and did not consider any third party. The appeal will allow Intel to present its case.

He disagrees with the conclusion that consumers were harmed since processors prices have dropped by a factor of 100 during the time of the case. “It’s a matter of competition,” he said. When accused of unfair pricing, he referred to the explanation of general volume discounts. AMD and Intel are bidding for business and if that is the case, “there is always one who wins and one who loses.”
Commenting on the ruling and the information that has been given to the company, the executive stated that Intel “does not understand everything.”

Otellini denied that Intel forced European retailers to shut out AMD from entire retail chains. It was our subjective impression during the call that Otellini was clearly unhappy about the casual way the EU announced the ruling and the fact that AMD was able to push this case through.  
 
According to the executive, Intel has invested about $5 billion in Europe and employs about 6000 people throughout the continent. Most R&D efforts are taking place in Ireland and the company has no plans to make any changes to this commitment, Otellini said. However, he conceded that the ruling “will impact the sales and marketing teams” in Europe, even if he noted that the company does not know if and how it will have to change its business practices in Europe.

Intel has been involved in similar cases in Japan, U.S. and Korea. In Japan, no fine was imposed and Intel got off the hook without admitting any guilt. The Korean government imposed a $23 million fine and Intel hopes to reverse that fine when the appeals process is finalized. As far as the FTC investigation in the U.S. is concerned, Otellini said that he could not say how the EC decision might influence the U.S. case.
 
So don’t expect Intel to give in just yet. It’s a big machine and it won’t agree to a big fine without a big fight. 

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