Chip-maker accused of paying clients not to use AMD products

Chip maker Intel will defend its business practices in court today as it attempts to avoid the huge fines the European Comission could impose for anti-competitive practices against rival company AMD.

After a six-year investigation, the Commission accused Intel of offering rebates to computer makers that use its processors, as well as paying clients to cancel products used by AMD.

"We believe our business practices are lawful," said a spokesman for Intel.

If found guilty, the supplier could face fines of up to 10 per cent of its annual global revenues - equivalent to $3.2bn (£1.6bn) in 2006.

The Commission demonstrated last month that it is not afraid to slap huge fines on companies - fining Microsoft €899m (£681m) for non-compliance with an order to open up its software to other developers.

AMD gained market share in 2005 and the first half of 2006, but suffered a downturn in the second half of the year following a price war.

Intel holds about an 80 per cent share of the chip market, while AMD controls less than 20 per cent.

The US Federal Trade Commission dropped an investigation about Intel's marketing practices in 2000.

The case will last two days.