The European Commission has imposed a record €1.06 billion fine on chip maker Intel and ordered it halt illegal rebates and other practices aimed at squeezing out its rival AMD. Intel has said it will appeal the decision.

'Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years,' EU Competition Commissioner Neelie Kroes said in a statement.

Intel said it would appeal, with chief executive Paul Otellini saying that the company 'takes strong exception to this decision'.

The EU said Intel paid computer makers to postpone or cancel plans to launch products that used AMD chips, paid illegal, secret rebates so computer makers would use mostly or entirely Intel chips, and paid a major retailer to stock only computers with its chips.

It ordered Intel to 'cease the illegal practices immediately to the extent that they are still ongoing'. Intel may continue to offer rebates, so long as they are legal, the Commission said.

The EU competition fine is the biggest imposed on an individual company, exceeding an €896m penalty last year against glass maker Saint-Gobain for price fixing, and a €497m fine in 2004 on Microsoft for abuse of dominance.

The Commission investigated practices dating back to 2002, and said Europe accounted for 30% of Intel's current worldwide €22 billion market. The Commission said Intel must pay the fine, which represents 4.15% of the company's 2008 turnover, within three months of the date of the notification of the decision.

Intel, whose microprocessors power eight out of every 10 PCs in the world, posted first quarter sales of $7.1 billion. The Commission started its investigation into Intel in 2001 after a complaint by Advanced Micro Devices. AMD has also filed a US lawsuit against Intel, which is set to be heard in court in 2010.