April 21, 2004 8:50 AM PDT

EU probes Intel-friendly procurement rules

European regulators are investigating procurement processes that call specifically for Intel chips in the computers purchased by government agencies in several member states, a spokesman for the European Commission said Wednesday.

Under laws governing the European Union, public agencies must use an open procurement process, said Jonathan Todd, a spokesman for the European Commission. As a result, the commission is investigating the computer procurement practices of seven member states, a move that may bode well for chip companies like Advanced Micro Devices.

"We received some complaints about the procurement of computers in several member states and began looking into this last year," Todd said. "We have an open procurement process here, and these rules do not allow for asking for products from a specific supplier, or if you do, you must also say, 'or the equivalent.'"

The commission late last month issued a formal notice for more information from Italy and Germany on its practices. And the commission currently is in talks with Austria, France, the Netherlands, Belgium and Finland.

Last month, Sweden addressed the commission's concerns by publishing an advisory to its government agencies on the procurement rules, Todd said.

"They published an advisory that made the procurement process general and not tied to a specific (vendor). We would be happy if others did this too," Todd said.

Under the commission procedures, Italy and Germany will have two months to respond to the information request. And if the commission is not satisfied with the response, it will inform the countries they are breaking the European Union's laws and will have another two months to remedy the situation.

Should the commission remain unsatisfied with the countries' measures, it can then take them to the Court of First Instance--a process that can take a couple of years.

Europe remains a substantial market for Intel, contributing nearly as much revenue as the Americas. During the first quarter, Intel generated $1.9 billion in Europe, or 24 percent of its total revenue, compared with $2.2 billion in the Americas, 27 percent of the chipmaker's total.

The investigation by the commission focuses on the procurement practices of the member states and does not address Intel's own business practices, Todd said.

Antitrust regulators in Europe and Japan are looking into complaints that Intel threatens PC makers with retaliation if they use AMD's chips. Intel, however, has denied those allegations.

 

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