The European Commission has found Intel guilty of anti-competitive behaviour and fined it over a billion euros.
The Commission has ordered the chip giant to refrain from any equivalent practises in the future. It ruled the firm damaged competition by excluding rival AMD from markets.
Competition Commissioner Neelie Kroes said the threat of AMD was widely recognised in internal Intel documents seen by the Commission.
She said Intel's rebates were a problem because of the conditions attached. She questioned whether an efficient competitor could offer such rebates. The conditions meant AMD could not compete with Intel on the merits of its products.
This undermined innovation - one PC manufacturer took up some free AMD processors but not all of those offered, because if it had done it would have breached its agreement with Intel. It was offered a million free AMD chips, but only accepted 160,000 so it would keep its Intel rebates.
Kroes said the Commission supported price competition but Intel's actions went far beyond that.
Intel paid retailer Media Saturn Holding on condition it only stocked machines with Intel chips. The company also made direct payments to computer makers to delay and limit release of machines with AMD inside.
Three computer makers were given rebates provided they sourced a set percentage of their chips from Intel. A fourth pledged to source all its laptop chips from Intel in exchange for rebates.
"Pay to delay" was aimed at stopping a competitor from selling its products to consumers.
The Commission found evidence that Intel went to great lengths to cover up these actions. Many of the agreements were made outside of official contracts.
Kroes said Intel had harmed millions and millions of European consumers, so the size of the fine should come as no surprise. She thanked European consumer associations for their support.
She said: "This goes to show the widespread dissatisfaction with Intel's action. I'd like to draw your attention to Intel's latest advert calling them sponsors of tomorrow, now they are sponsors of the European taxpayer." She told Intel to obey the law.
Kroes said the Commission could have raised the fine but it was still the highest ever imposed on a company. She said the fine was not the goal but changing behaviour. The fine was based on Intel's European turnover and the duration of the offenses.
She said the case was solidly based on case law and consumer harm.
Kroes welcomed changes to US competition regulation and said she had big hopes for future cooperation.
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