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Intel Could Face Fines for Unfair Pricing Model

By - Source: Tom's Hardware US | B 4 comments

News broke earlier this week that Intel could be facing sizable fines from the European Union in relation to the company’s pricing model.

Reuters this week reports that the European Commission, which has said Intel’s pricing practices were an attempt to drive AMD out of the market, is set to rule on whether or not the company should be fined. It seems the European Union has a big problem with the way Intel has been doing business, in particular rebates to computer makers and retailers.

Intel denies charges related to rebates offered as long as manufacturers agreed to obtain the majority of their processors from Intel as well as paying them to either to delay or cancel the launch of AMD based products. The company maintains that its actions were within legal boundaries.

However, while fines are never pleasant, especially during times when money is tight, the maximum fine would be 10 percent of Intel’s annual revenue. The Reuters report contains something which would cause worse pains for Intel: the possibility that the European Union could impose new rules in order to remedy Intel’s actions. Former Commission official Michael Tscherny hinted at just that and said the European Commission could destroy Intel’s pricing model.

"Will the Commission impose something that would destroy their pricing model, open up the market to competition and new entrants or to AMD? That is what they would be worried about, more than their reputation or anything else," said Tscherny.

Read more on Reuters.

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  • 0 Hide
    skalagon , 13 March 2009 02:48
    Well before anyone says anything, this will start more competition and competition is good for the consumer xD
  • 0 Hide
    Anonymous , 13 March 2009 05:47
    I would love to know what the EU has against companies doing well. It's like they have some unwritten policy that says: you can only earn so much money in a year, and if you earn more, then we're going to fine you. If I was Intel, I would pull all processors from retail markets in the EU by way of protest. leave it that way for 12 months. then we'll see how popular the European Commision is with their citizens.
  • 0 Hide
    Godiwa , 13 March 2009 15:18
    haz085 it seems you got no clue what it means if ONE company sits on the entire market for a product after crushing all the competition?

    could you imagines paying $2000 for one of the smaller models of CPUs? No? Well that is what happens if one company have monopoly of the market for their product.

    When there is competition in Intels market they ALWAYS lower their prices, and still earn plenty on the product, which means they earned loads on the products sold before they had competition. AMD can bring competition in most but not all areas of Intel's CPU lineup and it shows on the prices on those CPUs

    So EU is not against success, they are against a company getting a monopoly in their market because it would drive prices through the roof and hurt the market, and using unfair methods to drive other companies out of the market should be punished HARD, we want a fair market.
  • 0 Hide
    jennyh , 13 March 2009 20:13
    Haz what kind of dreamworld are you living in? The EU doesn't need intel processors, intel needs the EU market you balloon.