BRUSSELS — The European Commission fined Intel a record €1.06 billion on Wednesday for abusing its dominance in the computer chip market to exclude its only serious rival, Advanced Micro Devices.

The European Union’s competition commissioner, Neelie Kroes, said the penalty against Intel, the equivalent of $1.45 billion, was justified because the company had skewed competition and denied consumers a choice for chips.

Ms. Kroes said Intel had “used illegal anticompetitive practices to exclude its only competitor and reduce consumers’ choice — and the whole story is about consumers.” She said Intel’s practices had “undermined innovation.”

The previous record fine for similar abuses in the European Union was €497 million 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 European Union, beating by a significant margin previous record amounts of hundreds of millions of euros levied on chemical and cement companies over the past decade.

Paul Otellini, chief executive of Intel, said the company would appeal.

“We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace,” Mr. Otellini said. “There has been absolutely zero harm to consumers.”

Giuliano Meroni, president of A.M.D.’s operations in Europe, said the decision would “shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers.”

Ms. Kroes said Intel had pursued a strategy aimed mainly at excluding A.M.D. by paying computer makers and retailers to postpone, cancel or avoid A.M.D. products entirely.

The European Commission, which is the E.U.’s executive arm, also found that Intel “went to great lengths to cover up its anticompetitive actions,” Ms. Kroes added.

She ordered the company to stop offering rebates that were conditioned on buying less of a rival’s product, or not buying them at all, and that had helped Intel maintain a share of at least 70 percent of the market for microchip sales between October 2002 and December 2007.

Under the order, Intel must change its business practices immediately pending its appeal, although it can ask for an injunction. The company must write a bank guarantee for the fine right away, though that guarantee is held in a bank account until appeals are exhausted, a process that could take years.

The commission can levy fines of up to 10 percent of a company’s annual global sales. Intel’s sales were $37.6 billion in 2008; thus, the company could have faced a maximum penalty of close to $4 billion. Money collected in antitrust cases is added to the trade bloc’s annual budget of around €130 billion.

“Now they are the sponsors of the European taxpayers,” Ms. Kroes said.

On Tuesday, speaking to investors gathered for an annual meeting at the company’s headquarters in Santa Clara, California, Mr. Otellini had vowed that Intel would continue spending vast sums of money toward advancing its manufacturing lead over rivals. Intel has long embraced a strategy of keeping its research and development investments high during downturns as a means of applying more pressure on competitors when better times return.

The decision to impose a severe fine on Intel is another reminder of the emergence of European regulators as some of the world’s most activist enforcers of antitrust law, and it is an additional sign that the authorities worldwide are raising the stakes for the biggest technology companies.

Last year, the U.S. Federal Trade Commission stepped up its inquiries into Intel, opening a formal investigation.

This week, the head of the antitrust division of the U.S. Justice Department, Christine A. Varney, made clear that regulators would return to an aggressive enforcement policy against companies that abused their market dominance, after more relaxed policies under President George W. Bush. While Mr. Bush was in office, many small companies chose to take their complaints to regulators in Europe and Asia.

http://www.nytimes.com/2009/05/14/business/global/14compete.html?_r=1&hp