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The wheels of justice turn slowly indeed. Almost a full decade after Advanced Micro Devices first complained about its larger competitor, Intel, the European Commission on Wednesday handed down its largest ever fine for abuse of a dominant market position, ordering Intel to pay €1.1bn. The decision follows a 2005 ruling in Japan, and another in Korea last year, that found abuse by Intel. But do the opinions of bureaucrats matter?
Shareholders don’t think so. The share price of Intel, which had sales last year of $38bn, not to mention a market capitalisation of $85bn and $10bn of cash, barely moved on the news. The company disputes the finding and will appeal, further lengthening the process. European attempts at intervention with Microsoft, including then-record fines, trundle along, with little effect on the company’s behaviour. Investors are far more interested in Intel’s attempts to cut costs, improve margins and control inventories, the main subject of its analyst day on Tuesday.
The ruling may give some help to AMD. Favourable precedent could help the company’s civil suit against Intel set for trial in Delaware next March. Separate investigations by the Federal Trade Commission and the New York attorney-general’s office are ongoing, and any form of settlement would help relieve AMD’s debt load.
In terms of the market for microprocessors, however, little will change. The practice in question is allegedly restrictions attached to volume rebates, not the principle of rebates themselves. With about 70 per cent of the market for microprocessors – the central engine of every computer – Intel benefits from a self-reinforcing scale advantage that allows it to outspend AMD on research and development by more than four to one. In technology, trends in market share are rarely reversed. Plodding regulators can do little to change that fact.
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