EC to Intel: How About Some Chips With That Guacamole?
“After Gateway’s 2004 merger with eMachines, AMD attempted to revive the relationship it had enjoyed with Gateway until 2001, but experienced extremely limited success. While Gateway built one AMD-powered desktop model at the request of Circuit City, AMD remains locked out entirely of Gateway’s direct internet sales, its commercial offerings and its server line. According to Gateway executives, their Company has paid a high price for even its limited AMD dealings. They claim that Intel has beaten them into ‘guacamole’ in retaliation.”
Gateway officials once claimed that Intel “beat them into guacamole” in retaliation for doing business with rival AMD. Five years later, the European Commission is poised to give Intel a similar beating for doing so.
The EC has finally completed its review of Intel’s practice of paying computer makers to delay or cancel the release of machines outfitted with AMD (AMD) chips and, suffice to say, the commission has not concluded that it is “lawful, pro-competitive, and beneficial to consumers,” as the chipmaker claims. In fact, the EC has determined that Intel’s methods are exactly the opposite. And on Wednesday, it is expected to penalize Intel (INTC) by slapping it with what may be the highest antitrust fines in Europe’s history–as much as 10 percent of the company’s annual world-wide revenue. With Intel’s 2008 revenue topping out at $37.6 billion, penalties could conceivably reach $4 billion, far in excess of the $1.51 billion in combined fines that have been levied against Microsoft (MSFT).