The European Union (EU) recently exposed the reason behind its $1.6 billion fine on Intel (INTC) in the last quarter.
The EU produced internal email excerpts of leading PC makers, such as Dell (DELL), Hewlett Packard Company (HPQ), NEC Corporation of Japan and Lenovo of China, as well as Intel’s own employees.
The email excerpts displayed the PC makers’ concern regarding the usage of chips made by competitors such as Advanced Micro Devices (AMD). They also expressed the favor Intel was likely to bestow on those players that exclusively used Intel products.
Specific allegations include special rebates to PC-makers on the condition that they do little or no business with AMD, making special payments to PC-makers to delay or cancel AMD-based products and offering server microprocessors below cost to strategic customers to prevent customer losses.
The EU stood by its decision to impose the fine, as it believes that the evidence is sufficient to prove Intel’s guilt. It reprimanded Intel’s practices, which are commonly perceived to be anti-competitive and anti-innovation, resulting in reduction of consumer choices.
The negative publicity notwithstanding, Intel continues to maintain its leading position in the microprocessor market, with an 80.6% share of global microprocessor revenue in the second quarter of 2009 (iSuppli). This was a 1.5% sequential increase and 1.4% increase from the comparable quarter of the prior year.
However, AMD’s market share in the second quarter declined 1.4% sequentially and 0.4% from the prior-year period, mainly on account of lower prices.
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