EU Probes Government Procurement Favoring Intel-based Computers

The European Commission sent formal notices to France, the Netherlands, Finland and Sweden seeking information on public tenders for computers that either require they contain Intel chips or specify a chip speed only the U.S. giant can provide.

Similar letters were sent this year to Italy and Germany and their replies are now being evaluated.

The commission said it believes such requirements violate European law on public procurement.

"You can specify the performance you are looking for in a particular computer problem, but not a specification that can only be met by one manufacturer," said commission spokesman Jonathan Todd.

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The investigation was sparked by Intel's chief U.S. rival, Advanced Micro Devices, which said it complained to the EU about procurement tenders in several member states.

Jens Drews, AMD's spokesman in Europe, welcomed the expansion of the probe.

"We see this as a sign that the EU commission is serious about creating a level playing field in a critical IT sector in Europe," he said.

Intel said it was not involved in the probe.

"These tenders are being drafted by governments or local authorities," said Intel spokesman Kristof Sehmke in Antwerp, Belgium. "We do not influence that, of course."

AMD has long accused Intel of unfair sales practices in Europe, such as offering loyalty rebates to customers and signing exclusive purchasing agreements.

EU antitrust regulators reached a preliminary conclusion in 2002 that there was insufficient evidence to bring any charges. But in June, regulators said they would look into Intel's business practices again after AMD refused to withdraw its complaint.

In the latest probe, EU officials have backed away from accusing Intel of violating EU competition rules, adding they did not know why governments put Intel-only clauses in bid requirements.

The four countries cited have two months to respond to the notices. They could be hauled before the European Court of Justice if the contracts are found to violate EU rules and they fail to rectify them.

The commission said it was concerned about roughly a dozen tenders by local authorities or public bodies in France; an invitation to tender by the municipality of Amsterdam; three tenders from the Universities of Jyvaskyla and Tampere and Hame Polytechnic in Finland; and others by the Swedish municipality of Filipstad, Chalmers University of Technology, Sweden's national police authority and the Uppsala regional authority.

In trading Wednesday morning, Intel shares were up 87 cents at $21.15 on the Nasdaq Stock Market, near the lower end of their 52-week range of $19.64 to $34.60. AMD shares were up 31 cents at $14.01 on the New York Stock Exchange, also at the low end of their 52-week range of $10.76 to $18.50.

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