The European Commission has laid the hammer down on another American giant. Intel (NASDAQ:INTC) now joins Microsoft (NASDAQ:MSFT) in the club of antitrust-law offenders.
We'll see how big the hit is for the chip giant. For now, the company has to pay record fines of $1.4 billion into an escrow account, pending the inevitable appeals. The money may stay there for years while Intel pleads its innocence before the European regulators, and will ultimately become a part of the Union's budget if things don't go Intel's way.
And the company will also have to stop the practices that allegedly brought it to this impasse. According to competition commissioner Neelie Kroes, that means an end to rebate programs that supposedly forced retailers across the continent to sell at least 80% Intel computers and no more than 20% Advanced Micro Devices (NYSE:AMD) products, leading to reduced consumer choice and stifled competition. 20% a day keeps the antitrust hounds away, or so Intel may have thought. Just enough to keep the only real competition alive, but not so much that it became a real threat. But antitrust bodies caught the scent, so that theory seems shot to pieces.
Predictably, AMD gloats a bit over the decision. "We are looking forward to the move from a world in which Intel ruled, to one which is ruled by customers," the company said in a written statement. "Intel broke the law and consumers were hurt."
Just as predictably, Intel professes its innocence, promises to appeal, and says that it will work with the authorities to comply with the decision. Knowing how long it took Microsoft to slog through the same process, and the final outcome of those proceedings, it looks like Intel may be in for some real pain overseas.
The monetary damages may not amount to much, but restricting its business practices -- sort of akin to splitting the Windows behemoth into its component parts -- could have a real effect on the dynamics of the two-player processor industry. And when Hewlett-Packard (NYSE:HPQ), Dell (NASDAQ:DELL), and other system integrators start adjusting their global expectations to what they're doing in Europe, Intel could be in real trouble -- everywhere.
And when Intel sinks, AMD floats. Keep that in mind, dear Fool.
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