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Intel probed in Europe
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April 6, 2001: 12:31 p.m. ET
European Commission investigates chipmaker's marketing practices
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NEW YORK (CNNfn) - European regulators confirmed Friday that they are investigating Intel Corp.'s marketing practices, and the world's largest chipmaker said it was cooperating with the inquiry.
European Commission spokeswoman Amelia Torres said that the EC was responding to two different complaints -- at least one of which was generated by a U.S.-based company -- received late last year.
The charges involve claims of loyalty rebates offered to Intel customers and exclusive purchasing obligations on PC manufacturers or retailers, Torres said.
The Commission studied the complaints and then informed Intel, inviting the company to respond. They have also sent requests for information to computer manufacturers and retailers and are awaiting those responses. Torres said the Commission has no reason to be dissatisfied with Intel's level of cooperation.
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We have been notified and have a request for information and we are cooperating.
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Chuck Mulloy
Intel spokesman |
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"The investigation is at a very early stage and the commission has not made any finding that Intel actually has committed an infringement of European Union competition law," the Commission said.
It is impossible to determine the length of the investigation at such a preliminary stage, Torres said.
Intel confirmed it has been under investigation and said it was providing information on its business practices. "We have been notified and have a request for information by the director general for competition, and as is our normal policy we are cooperating," said Chuck Mulloy, an Intel spokesman in Santa Clara, Calif.
Mulloy said the inquiry has been going on for "a number of months" and that the firm "believes that its business practices are both lawful and fair."
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The Commission denied it is taking up previous efforts by the U.S. Federal Trade Commission to investigate Intel, as suggested by newspaper articles.
The company settled charges with the FTC in 1999, and the FTC dropped an additional investigation about the firm's marketing practices last September.
Intel also has faced -- and won -- private suits by rivals challenging its business practices.
The probe won't have a major competitive impact, said Joe Osha, semiconductor analyst, Merrill Lynch. "It's not going to effect the company's position," Osha stated.
Mulloy said that the commission has asked the company to provide information related to its bus architecture for microprocessors and its general business practices.
A bus carries information inside the computer. Its speed and interconnectivity are crucial for the operation of the computer, and for the ability of rivals to interconnect.
 The FTC settlement focused on whether the firm was trying to withhold information to prevent its customers from becoming its rivals.
The chip business is based on cross-licensing of intellectual property. Every one of Intel's chips uses information from other chip makers and computer companies, and the products of those companies rely equally on Intel information.
In the United States, some companies alleged that they were forced to surrender some of their designs used in chips to Intel without proper compensation.
They said that when they argued, Intel threatened to put them out of business by withholding products or support. FTC officials said any computer company would go out of business without proper support from Intel, because the vast majority of chips at the heart of a computer are supplied by the firm.
When the FTC settled a case dealing with some of those issues, FTC Chairman Robert Pitofsky said the deal meant that "if you have an intellectual property dispute, Intel cannot cut you off."
If the European Commission should reach a preliminary conclusion that Intel (INTC: down $1.25 to $24.38, Research, Estimates) has violated EU antitrust law, then the company will be invited to respond at an oral hearing in Brussels. The Commission will then proceed to a final conclusion, Torres said.
-- from staff and wire reports 
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