EC to clear Intel in antitrust inquiry, source says

The European Commission will drop its antitrust probe of Intel, after concluding that complaints it received toward the end of 2000 from two rivals proved groundless, said a source close to the inquiry Friday.

The move would mirror the outcome of a similar investigation of Intel in the U.S., which was dropped by the Federal Trade Commission in September 2000.

"The intention is to close the (Commission's) inquiry," the source said on condition of anonymity. "After careful analysis of the complaints the Commission has decided that the accusations are unfounded."

When the investigation into Intel came to light last April the Commission said that dominant companies must be careful how they use loyalty schemes with their customers, but the person close to the case said Friday, "this doesn't mean that a dominant company cannot grant rebates to loyal customers."

The identity of the companies that sparked the probe by the European Union (EU) competition regulator have never been officially revealed but are believed by industry insiders to be Advanced Micro Devices Inc. of Sunnyvale, California, and Taiwan-based Via Technologies Inc. AMD and Via Technologies said last year that they provided information to the Commission during its probe of Intel, but both companies have declined to comment on whether they made the complaints that sparked the probe.

The complaints charged Intel, the world's largest maker of microchips for personal computers, of abusing its dominant position by tying in customers with loyalty schemes and co-funding PC makers' marketing campaigns as long as the ads featured the "Intel Inside" logo. Intel says this joint marketing program works with 1,500 companies worldwide, and 800 in Europe.

The complaints also alleged that the company competed unfairly by selectively licensing the design of system buses and other connection technology that links chips with other computer components. They charged that this created compatibility problems for rival chip makers.

An Intel spokesman said Friday that the chip maker was not aware that the EC planned to drop its complaint. "We were unaware of any pending decision related to this," said Intel spokesman Chuck Mulloy.

"We know that Via Technologies dropped their complaint," Mulloy said, "but we are unaware that the Commission had made any final determination on that or the other complaint."

The Commission receives around 100 antitrust complaints a year and more than half of these are thrown out by the regulator without any formal ruling or public statement being made.

If the complainants disagree with the Commission's conclusions they can force the EU competition regulator to take a formal decision in the Intel case, said a lawyer familiar with the investigation. "Once there is a formal decision to drop the case the rivals can then attack that decision in court," said the lawyer, who requested anonymity.

Rivalry among AMD, Via and Intel has become intense. In December 2001 Intel dropped a lawsuit against Via over that company's alleged violation of Intel's patent for the Pentium III processor. A month earlier the Northern California federal district court in San Jose denied a motion by AMD to unseal court documents concerning Intel and make them available to the European Commission for its investigation.

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