South Korean regulators said this morning Intel had abused its dominant position in the local market and ordered the world's top semiconductor maker to pay a fine of about $26 million.
The ruling, which follows a three-year probe, is being closely watched as similar antitrust investigations are underway in the United States and in Europe. Intel's chief lawyer said the company would almost certainly file an appeal.
"We are disappointed by the decision and we think the KFTC (Korea Fair Trade Commission) has either misunderstood or just possibly chosen to ignore a great deal of the evidence that contradicts its findings," Bruce Sewell, Intel's general counsel, said.
Because the KFTC defined the issue as a purely Korean one, the ruling "will have very little impact outside of Korea," Mr Sewell added. The head of the KFTC defended his organisation's decision.
"Our decision to fine the company was based on facts and the probe was not conducted with any agenda," KFTC Chairman Baek Yong-ho told a news conference.
"If players cannot abide by the minimum rule of the market, we have to take firm measures to defend the interests of the market," Mr Baek said, referring to the regulator's general stance.
The KFTC said in a statement Intel offered rebates to South Korean PC makers including Samsung Electronics Co Ltd and Trigem Computer between 2002 and 2005 in return for not buying microprocessors from rival Advanced Micro Devices Intel and AMD make the central processing unit (CPU) chips at the heart of the world's personal computers and servers.
The KFTC ordered Intel to stop offering the rebates and pay a fine of 26 billion won ($25.6 million), pending confirmation of revenue made by Intel as a result of the practice.
"Intel's rebates were paid in return for not using its rivals' products and (this) has hurt market competition by limiting the choice of local PC makers in selecting business partners," KTFC said.
"Taking into account Intel's rebates, AMD could not possibly fight Intel even if its chips were offered for free.
"South Korean consumers had to buy PCs at higher prices as domestic PC makers were forced to buy Intel's pricier CPU."