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Why EU regulators can destroy Intel pricing model?

By Amarendra Bhushan for CEOWORLD Magazine Updated:March 9, 2009

The Santa Clara-based Intel Corp, the world leader in silicon innovation, develops processor technologies could face a hefty fine from EU regulators over charges it fiddled with retail channels to suppress competitors, but of more concern could be any fresh rules imposed by the EU.

In two formal charge sheets laid out in July 2007 and July 2008, the Commission said Intel gave rebates to computer makers so long as they agreed to obtain most or all of their CPU chips from Intel and made payments to induce computer makers either to delay or cancel the launch of products using AMD chips.

- Maximum possible fine could be 10 percent of its annual revenue.
- If EU imposes remedies which would change its pricing model for the company is the greatest risk.
-

If you remember the European Commission has already said Intel’s pricing practices
“…in particular rebates to computer makers and retailers
..were a bid to drive rival Advanced Micro Devices”
out of the market and is set to rule soon on the issue.

Will the Commission impose something that would destroy their pricing model, open up the market to competition and new entrants or to AMD?

Yes/NO/Maybe

Is intel worried about its reputation or pricing model?

EU regulators fined Microsoft. Yes, it hurt their image, but it didn’t hurt their cash balance and their market share is still almost at the same level

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