The European Commission on Wednesday fined Intel a record of about $1.45 billion (1.06 billion euros) for abusing its dominance in the market for computer chips to exclude Advanced Micro Devices, which is Intel's only serious rival, The New York Times's James Kanter reported. The E.U. competition commissioner, Neelie Kroes, said the penalty against Intel, the world's largest chip maker, was justified because the company had skewed competition and robbed consumers of choice. Ms. Kroes said Intel "used illegal anticompetitive practices to exclude its only competitor and reduce consumers' choice - and the whole story is about consumers. " She added that Intel's practices "undermined innovation." The previous record fine for similar abuses in the European Union was 497 million euros, or $677 million at current exchange rates, imposed on Microsoft in March 2004 for blocking competition in markets for server computers and media software. The fine also is the largest ever imposed for any breach of competition law in the E.U., beating by a significant margin previous record amounts of hundreds of millions of euros levied on chemical and cement companies over the past decade. (thanks Stumpus)

Update: Intel CEO Paul Otellini has issued a statement on the EC ruling: "Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace – characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal."

"We do not believe our practices violated European law. The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not. The Directorate General for Competition of the Commission ignored or refused to obtain significant evidence that contradicts the assertions in this decision. We believe this evidence shows that when companies perform well the market rewards them, when they don't perform the market acts accordingly."

"Intel never sells products below cost. We have however, consistently invested in innovation, in manufacturing and in developing leadership technology. The result is that we can discount our products to compete in a highly competitive marketplace, passing along to consumers everywhere the efficiencies of being the world's leading volume manufacturer of microprocessors."

"Despite our strongly held views, as we go through the appeals process we plan to work with the Commission to ensure we're in compliance with their decision. Finally, there should be no doubt whatsoever that Intel will continue to invest in the products and technologies that provide Europe and the rest of the world the industry's best performing processors at lower prices."

Update2: AMD's Nigel Dessau has made a rather lengthy blog post on the subject of today's $1.45B fine against Intel.

While Intel may want you to believe this is about "discounting", it really isn't at all. The ruling – more than eight years in the making – is about how Intel deliberately used its monopoly profits to control a critically important industry. How it has decided what consumers are allowed to buy, and where they are allowed to buy it. How Intel severely punishes PC manufacturers, suppliers and retailers who do not play by its rules. That is what Europe is putting a stop to. We applaud them for doing so, and if you buy computers and value innovation, so should you.