Intel has been slapped with a big fine in Europe for impeding AMD’s ability to fairly compete in the market — but what are the implications for Intel’s mobile strategy?

Intel CEO at IM 2013 1024x681 Intel has a $1.4 billion problem in Europe

Intel’s strategy of giving computer vendors rebates to exclusively take Intel chips was once again ruled unlawful by the European Union’s competition regulator, as the regulator upheld a $1.4 billion ($1.06 billion EUR) fine first issued in 2009 levied against Intel for what it called unfair business practices that targeted AMD.

Between October 2002 and 2007, Intel had given major computer vendors Dell, Lenovo, HP, and NEC rebates to exclusively use Intel’s chips in their systems. In addition, Intel had given cash payments to HP, Acer, and Lenovo to delay or cancel the sale of systems using AMD CPUs. According to court documents published Thursday, the regulator’s legal Commission considered Intel’s virtual hegemony in the x86 market — at the time it controlled 70 percent of the desktop CPU market share — when deciding that these rebates were an unfair barrier for competitors to enter the market.

“The General Court finds that the commission showed to the requisite legal standard the existence of the exclusivity rebates and the naked restrictions at issue in its decision. It rejects Intel’s arguments seeking to call into question the findings made in that regard by the commission,” the court said in its ruling. “The commission demonstrated to the requisite legal standard that Intel attempted to conceal the anticompetitive nature of its practices and implemented a long term comprehensive strategy to foreclose AMD from the strategically most important sales channels.”

The court first ruled against Intel in 2009, and Intel launched its appeal in 2012.

Going forward Intel has two options: it can appeal the fine to the EU’s supreme court, or pay the full fine.

Intel, for its part, is not commenting on the issue and it’s unclear the direction it will decide to take.

A mobile rematch?

Considering this precedent, one could speculate on whether another court case between Intel and AMD based on Intel’s contra revenue scheme and $100 million “innovation” fund geared towards Shenzhen manufacturers.

Clearly Intel doesn’t have an overall commanding market share in the mobile processor market. They play underdog to the dozens of vendors using ARM-based chips.

However, in the small — but certainly growing — sector of x86 mobile SoCs it could be argued that AMD isn’t being given the chance to fairly compete because of Intel’s contra revenue scheme and other incentives. To be sure AMD has a multitude of its own problems with its mobile SoCs, and from a technical standpoint they might not be competitive at the current time with Intel’s offerings when considered for a tablet form factor. But at the same time, if AMD’s mobile SoCs were to be technically competitive with Intel’s offerings they would be automatically shut out of the market because of the incentives Intel offers.

Whether this ruling by the EU’s competition regulator sets the precedent for a follow-up case based on Intel’s incentives for vendors to adopt its mobile chips is up to the courts to decide. But all things considered, this ruling may end up being a victory for AMD in more ways than one.

 

Read the court’s findings here: 

EU regulator ruling on AMD vs. Intel