Intel Monopoly Abuse

European Union regulators accuse the computer circuits giant with unfair international trade practices that undercut technology rival Advanced Micro Devices.

Back in 2003, Advanced Micro Devices (AMD) introduced microprocessors that outperformed Intel chips.

Intel started to lose market share around the world.

Regulators from the European Union (EU) say that Intel responded with unfair business practices, namely:

• Giving a large number of signficant rebates to computer manufacturers for including Intel central processing units (CPUs)
• Paying computer makers to delay or cancel any product line that used AMD chips; and
• Selling Intel chips to major clients including universities and governments at unreasonably low prices.

But isn't it good for international trade clients if an influential parts supplier like Intel lowers prices? The answer is no, not over the longer term.

Sure, buyers will enjoy lower costs in the short-term. However, predatory pricing forces competitors to sell their products at below average costs. Eventually smaller rivals go out of business.

That's bad for international trade clients because fewer competitors means less choice and a slower pace for innovation should Intel assume a monopoly positon in the world trade of computer chips.

Intel has until mid-October 2007 to respond. Then, the EU's executive branch will make a decision that could fine Intel up to 10% of its global revenues for each year that the company broke fair trade laws.

According to Aoife White from the Associated Press, Intel's worldwide sales were US$36 billion in 2006.