Intel fights $1.3 billion EU antitrust fine in court

LUXEMBOURG Tue Jul 3, 2012 3:23pm BST

A woman walks past an Intel logo at the 2012 Computex in Taipei June 5, 2012. Computex, the world's second largest consumer electronics trade fair, runs from June 5 to 9. REUTERS/Yi-ting Chung

A woman walks past an Intel logo at the 2012 Computex in Taipei June 5, 2012. Computex, the world's second largest consumer electronics trade fair, runs from June 5 to 9.

Credit: Reuters/Yi-ting Chung

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LUXEMBOURG (Reuters) - EU antitrust regulators relied on "profoundly inadequate" evidence in their case against Intel, the U.S. chipmaker said in court on Tuesday in a bid to quash a record 1.06 billion euro ($1.33 billion) fine.

The European Commission penalised the world's No.1 chipmaker three years ago for hindering arch-rival Advanced Micro Devices, after an eight-year investigation.

The fine, which represented 4.15 percent of Intel's 2008 turnover versus a possible maximum of 10 percent, was the biggest ever levied on a company.

A panel of five judges at the General Court in Luxembourg, Europe's second highest, will hear arguments from both the EU watchdog and Intel during the four-day hearing, in which the company wants its conviction and fine thrown out or reduced.

The Commission did not have sufficient evidence of any wrongdoing by Intel and relied too much on subjective comments by the company's customers, Intel's lawyer Nicholas Green told the court.

"The quality of evidence relied on by the Commission is profoundly inadequate. The analysis is hopelessly and irretrievably defective," he said.

"The Commission's case turns on what customers' subjective understanding is," Green said.

U.S. No.2 PC maker Dell Inc., Hewlett-Packard Co, Japan's NEC, world No.2 PC maker Lenovo and German retail chain Media Saturn Holding received rebates from Intel during the period investigated by the regulator.

Lawyers for the Commission said this was at the core of Intel's illegal business practice.

"These kind of rebates can only be intended to tie customers and put competitors in an unfavourable position," Commission lawyer Nicholas Khan told judges.

He said contract wording also showed that "Intel carefully camouflaged its anti-competitive practices".

Intel gained backing from the European Ombudsman, who censured the Commission for procedural errors in its investigation.

In his non-binding report issued five months after the regulatory finding, the Ombudsman said he had found "maladministration" because the regulator had failed to make a proper note of a meeting with Dell during its probe.

The Association for Competitive Technology, a lobby group representing more than 3,000 small software developers and information technology firms, supported Intel.

French consumer organisation Que choisir is backing the Commission's position.

The General Court is expected to rule in the coming months. Companies can appeal to the highest court, the EU Court of Justice, if they take their case further.

The case is T-286/09, Intel vs Commission.

(Reporting by Foo Yun Chee; editing by Rex Merrifield and Mark Potter)

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