Korea fines Intel $25M for antitrust violations

IDG News Service - The Korea Fair Trade Commission has fined Intel Corp. $25.4 million for abusing its dominant position in the microprocessor market.

The commission said Intel offered rebates to South Korean computer makers if they agreed not to buy chips from Intel rival Advanced Micro Devices Inc., a practice it said was in violation of fair trade rules.

Intel said it disagreed with the ruling and indicated that it will appeal it to the high court in Seoul. Bruce Sewell, Intel general counsel, said Intel believes the commission did not give full consideration to the evidence it presented.

"When we get to a court where we have a real judge looking at this, that [will be] good for us, and we have a right to do that," Sewell said.

The commission issued a summary of its findings today. The full findings are expected to be published in 30 to 60 days. Intel will then have 30 days to review them, after which it can file an appeal to the high court in Seoul.

In a statement (in Korean), the KFTC said Intel offered the rebates between 2002 and 2005 to PC makers, including Samsung Electronics and Trigem Computer. The ruling is similar to one issued by Japanese regulators in 2005. Intel is also being investigated in Europe and the U.S. for similar practices.

KFTC officials first began looking into Intel's business practices in 2005, continuing the investigation with an "unscheduled visit" to Intel's South Korea offices in February 2006.

Last September, the commission issued its preliminary antitrust charges, known as a "statement of objections." Intel denied any wrongdoing.

The KFTC has shown no reluctance in the past to take on big companies that it believed engaged in anticompetitive practices, although the fines in Korea have been relatively light compared with those levied against companies in other countries. In 2005, the KFTC fined Microsoft $34 million and required it to sell a version of Windows in Korea that did not bundle instant messaging or Windows Media Player software, while the European Commission fined Microsoft hundreds of millions of dollars in a similar action in 2004. The state of New York also launched an investigation of Intel's business practices in January.

An AMD official welcomed the ruling. "It's not surprising to me at all, given [Intel's] past behavior and the different things going on in different countries," said Patrick Moorhead, AMD's vice president of advanced marketing.