Intel Close to Facing EU's Antitrust Charges

By Colleen Taylor -- Electronic News, 10/4/2006

Investigators for the European Commission, the regulatory arm of the European Union, are likely to pursue antitrust charges against microprocessor leader Intel Corp., according to various reports.

The charges are expected to allege that Intel has undermined competition by offering rebates to computer manufacturers that shut out its rival, Advanced Micro Devices, according to sources cited in Wall Street Journal, Reuters and Forbes reports. The European Commission is also said to be preparing allegations that Intel has engaged in predatory pricing aimed at keeping AMD's competing chips out of the market.

While Intel could not be immediately reached for comment, buzz of an impending EU investigation into Intel has been building for some time now. The official filing of charges would be the result of five years of investigation into Intel's allegedly anticompetitive practices.

The impact of the European Commission's investigation will not go unnoticed on Wall Street. According to financial firm Lehman Brothers, the news is likely to be a headwind for Intel’s stock and may well act as a catalyst for AMD, which faced a set back when a U.S. federal judge dismissed a significant portion of AMD's antitrust lawsuit against Intel on September 26. The firm noted in a research note this morning that the months Intel would spend battling the claim would likely weaken Intel's stock, regardless of the charges' outcome.

The firm further said that it continues to predict that AMD's stock will come out on top over the longer term, given its unit share gains with key OEMs. Lehman’s Intel price target is $23, while its AMD price target is $29.

Today’s report from Lehman follows a research note the firm put out during last week’s Intel Developer Forum, where it promoted AMD over Intel long term.