The European Commission confirmed on Friday it had issued formal charges against Intel, the world's biggest computer chip maker, over using allegedly illegal tactics against smaller rival Advanced Micro Devices (AMD).

The Commission sent a statement of objections to the U.S. computer chip maker on Thursday, saying the company had abused its dominant market position to exclude AMD from the x86 computer processing units market.

The Commission, the regulatory arm of the European Union, outlined three types of abuse in its statement.

First, it said the company had provided "substantial rebates" to various computer manufacturers on condition they got all or most of the their chips from Intel. Secondly, the Commission alleges Intel made payments to manufacturers to induce them to either delay or cancel the launch of a product using an AMD chip. And thirdly, the commission said Intel had offered chips in the server market at below cost to undercut its rival.

The Commission said the three types of conduct could each constitute an abuse of position, and said that together they "reinforce each other and are part of a single overall anti-competitive strategy."

Bruce Sewell, Intel's senior vice-president and general counsel, said the company is confident they have done nothing wrong and look forward to responding to the allegations made by its rival AMD, also based in the United States.

"We are confident that the microprocessor market segment is functioning normally and that Intel's conduct has been lawful, pro-competitive, and beneficial to consumers," he said in a statement.

"While we would certainly have preferred to avoid the cost and inconvenience of establishing that our competitive conduct in Europe has been lawful, the Commission's decision to issue a statement of objections means that at last Intel will have the opportunity to hear and respond to the allegations made by our primary competitor."

"The case is based on complaints from a direct competitor rather than customers or consumers," he said.

Intel has 10 weeks to respond to the allegations and will get a chance to have an oral hearing. If the allegations are confirmed Intel would be ordered to cease the abuse and may have to pay a fine.

The two companies are currently embroiled in a lawsuit in the U.S. District Court in Delaware after AMD filed a suit in 2005 over similar allegations. Intel has denied any anti-competitive behaviour.

Intel has about an 80 per cent share of the $35 billion Cdn. personal-computer chip market.