Following complaints from chip maker AMD, the European Commission has imposed a fine of 1.06 billion euros to Intel Corporation for abusing its dominant position in the computer chip market from 2002 to 2007.

Neelie Kroes, European commissioner for competition policy, commented that for more than five years Intel has violated Article 82 of the EC Treaty, by abusing its dominant position with its computer chip ‘x86 central processing units’.

Kroes explained that it is not the fact that Intel had a dominant position in the market that posed a problem it was due to the company illegally excluding its competitors.

“The fact that Intel had such a large market share is not a problem in itself. What is the problem is that Intel abused this position by using illegal anti-competitive practices to exclude essentially its only competitor, and thus reduce consumer choice, in the worldwide market for x86 chips,” said Kroes.

The commission found that Intel excluded its competitors in two ways. Through illegal loyalty rebates and by paying manufacturers and retailers to restrict the commercialisation of competitors’ products.

“These illegal actions were designed to preserve Intel’s market share at a time when their only significant rival – AMD – was a growing threat to Intel’s position. This threat was widely recognised by both computer manufacturers and in Intel’s own internal documents seen by the commission,’ said Kroes.

The commission highlighted that the computer manufacturers involved were Acer, Dell, HP, Lenovo and NEC. The retailer involved is Media Saturn Holdings, the parent company of Media Markt.

Kroes also emphasised that there wasa substantial evidence that Intel went to great lengths to cover-up many of its anti-competitive actions.

“Many of the conditions mentioned above were not to be found in Intel’s official contracts. However, the Commission was able to gather a broad range of evidence demonstrating Intel’s illegal conduct through statements from companies, on-site inspections, and formal requests for information,” said Kroes.

Kroes also remarked that given the fact that Intel has harmed millions of European consumers and deliberately kept competitors out of the market for over five years, the size of the fine should not come as a surprise.