European Watchdog Finds Fault In EU Handling Of Intel Case

Washington DC (AHN) – The European Ombudsman today criticized the decision of the European Commission to impose more than a $1 billion fine on microchip producer Intel earlier this year.

In its complaint dated July 10, 2008, to the Ombudsman, Intel claimed that the Commission, the executive arm of the European Union failed to take minutes of a meeting with a senior Dell executive held on August 23, 2006. This was despite the fact the meeting was directly related to the subject matter of the ant-trust investigation.

The Ombudsman, Nikiforos Diamandouros agreed that the aforementioned meeting did concern the subject matter of the Commission investigation. “He also found that the Commission did not make a proper note of that meeting and that its investigation file did not include the agenda of the meeting,” the Ombudsman’s office said in a statement. It added, “The Ombudsman concluded that this constituted maladministration.”

The statement further noted, “The Ombudsman did find, however, that the Commission failed to make a proper note of a telephone call between the Commission and Dell, in which the information exchange agreement was discussed.” The statement concluded by saying, “Such a note would have helped to clarify the relevant facts.”

Diamandouros commented on the situation saying, “I hope that my decision in this case will help the Commission to improve its administrative procedures by ensuring that its future anti-trust investigations are fully documented.”

Intel in a statement welcomed the Ombudsman’s decision saying that it validated its charges. “Intel has consistently said that DG Comp (Director General Competition, European Commission) ignored evidence that was potentially exculpatory for Intel and that it was selective in its use of other evidence,” the company stated.

Intel had lodged a complaint with the Ombudsman, following the commission ruling in May and then knocked on the doors of the European Court of First Instances in Luxembourg.

According to sources in the European Court, the complaint is expected to come up for hearing during the first half of 2010 but experts see the present criticism from the Ombudsman has highlighted the fault lines in the European Commission’s decision.

Earlier this year, the European Competition Commissioner Neelie Kroes imposed a fine of 1,060,000,000 Euro ($1,581,488,200) on Intel Corporation “for violating EC Treaty antitrust rules on the abuse of a dominant market position by engaging in illegal anticompetitive practices to exclude competitors from the market for computer chips called x86 central processing units (CPUs).”

Commissioner Kroes at the time had said, “Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years. Such a serious and sustained violation of the EU’s antitrust rules cannot be tolerated.”

The computer manufacturers concerned by Intel’s conduct in the Commission’s decision are: Acer, Dell, HP, Lenovo and NEC. The retailer concerned is Media Saturn Holding, owner of the MediaMarkt chain.