updated 7/27/2007 7:54:41 AM ET 2007-07-27T11:54:41

EU regulators said Friday they have charged Intel Corp. with monopoly abuse for blocking rival computer chipmaker Advanced Micro Devices Inc.'s access to customers.

Intel immediately said its conduct had been lawful and said it welcomed the chance to finally respond to allegations made by its main competitor.

The European Commission claimed that Intel gave "substantial rebates" to computer makers for buying most of their x86 computer processing units, or CPUs, from Intel; that it made payments to manufacturers to get them to delay or cancel product lines using AMD chips; and that it sold its own chips below cost on average to strategic server customers on bids against AMD products to try to muscle into that business.

It said each of these alone broke EU law by shutting out AMD from the market. Together they amounted to a strategy that damaged the rules of fair play in an effort to keep AMD from eroding Intel's market leadership, it said.

"The Commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anticompetitive strategy," it said.

Intel has a chance to defend itself before the EU's executive arm takes a final decision that could order the company to stop abusive behavior or charge it fines that can run into the hundreds of millions of dollars.

Intel, based in Santa Clara, Calif., is the world's biggest chipmaker.

The company's general counsel, Bruce Sewell, said Intel was confident that the microprocessor market was functioning normally and that Intel's behavior had been lawful, pro-competitive and beneficial to customers.

"The case is based on complaints from a direct competitor rather than customers or consumers," he said. "The evidence that this industry is fiercely competitive and working is compelling. When competitors perform and execute the market rewards them. When they falter and underperform the market responds accordingly."

Intel has 10 weeks to reply to the preliminary charges and can seek an oral hearing to put its side.

The EU's executive arm has been investigating Intel's business behavior since 2001, looking into complaints from AMD and computer manufacturers that it used its power as a market leader to shut out rivals for chips that run on Microsoft software.

The case has run hot and cold over the last six years. EU regulators had to shut down one line of inquiry when Taiwan's Via Technologies withdrew its complaint about computer circuits _ or chipsets _ in 2002. At the time, they also said they did not have enough evidence to pursue an AMD complaint on microprocessors.

AMD filed another complaint in 2004 that EU officials said they had no choice but to investigate _ or risk AMD taking court action for negligence.

In 2005, EU regulators raided Intel offices in Britain, German, Spain and Italy two weeks after AMD filed another set of lawsuits in Japan and the United States.

The EU investigation widened last year to include AMD's allegations that Intel had pressured Europe's largest consumer electronics retailer Media Markt not to offer computers that carried AMD chips.

Microprocessors from Intel dominate the global market in desktop computers that run Microsoft's Windows operating system.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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