The fine exceeded a euro899 million monopoly abuse penalty for Microsoft Corp. last year. Intel called the decision “wrong” and said it would appeal.

Intel, based in Santa Clara, California, has about 80 percent of the world’s personal computer microprocessor market — and faces just one real rival, Advanced Micro Devices Inc.

The European Commission says Intel broke EU competition law by exploiting its dominant position with a deliberate strategy to keep AMD out of the market that limited customer choice.

It said Intel gave rebates to computer manufacturers Acer, Dell, HP, Lenovo and NEC for buying all or almost all their x86 computer processing units, or CPUs, from Intel and paid them to stop or delay the launch of computers based on chips from AMD, which is headquartered in Sunnyvale, California.

Intel president and CEO Paul Otellini said the company would appeal to the EU courts because “the decision is wrong” and “there has been absolutely zero harm to consumers.” The company promised to comply with the EU order but criticized it as extremely ambiguous.

AMD’s Europe president Giuliano Meroni said the EU order “will shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers.”

Regulators said the company also paid Germany’s biggest electronics retailer, Media Saturn Holding — which owns the MediaMarkt superstores — from 2002 to 2007 to only stock Intel-based computers.

This meant workers at AMD’s biggest European plant in Dresden, Germany, could not buy AMD-based personal computers at their city’s main PC store.

“Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years,” said EU Competition Commissioner Neelie Kroes. “Such a serious and sustained violation of the EU’s antitrust rules cannot be tolerated.”

Kroes joked that Intel would now have to change its latest global ad campaign — “sponsors of tomorrow” — to proclaiming “the sponsor of the European taxpayer.”

“I can give my vision of tomorrow for Intel here and now: Abide by the law,” she added.

EU regulators said they calculated Intel’s fine on the value of its European chip sales over the five years and three months that it broke the law. Europeans buy some 30 percent of the euro22 billion ($30 billion) in computer chips sold every year.

They could have gone even higher as EU antitrust rules allow them to levy a fine of up to 10 percent of a company’s annual global turnover for each year of bad behavior. Intel’s worldwide turnover was euro27.9 billion ($38.8 billion) in 2007.

European consumers group BEUC welcomed the fine and said Intel should be held to account to consumers through civil suits in European courts. So far these are rare but the EU is urging victims of antitrust action to seek damages.

“Intel should be liable to compensate the victims of its illegal practices,” said Monique Goyens, head of the group. “Consumers have been paying too much for their computers and they should be compensated.”

The manufacturer rebates started in 2002, the EU said, with most ending in 2005 — apart from a 2007 deal for one unidentified company to only source notebook computer chips from Intel.

Regulators said rebates that give discounts for large orders are illegal when a monopoly company makes them conditional on buying less of a rival’s products or not buying them at all.

Manufacturers depend on Intel to supply most of the chips they need and faced higher costs if they lost most or all of a rebate by choosing AMD chips for even a small order.

Hewlett-Packard buys a fifth of Intel chips with Dell taking 18 percent, according to market research from Hoovers.

The discounts were so steep that only a rival that sold chips for less than they cost to make would have any chance of grabbing customers, the EU executive said.

It said AMD offered 1 million free chips to one manufacturer — which could not accept because that would lose it a rebate on many millions of other chips. It only took 160,000 free chips in the end, regulators said.

Intel’s payments to manufacturers ordered the company to delay the European launch of AMD’s first business desktop by six months. They were also paid to only sell the AMD line to small and medium companies and to only offer them directly to customers instead of to retailers.

Other manufacturers were paid to postpone the launch of AMD-based notebooks by several months, from September 2003 to January 2004 and from September 2006 to the end of 2006 — missing the key Christmas market.

The European Commission said Intel tried to conceal the conditions attached to these payments and details only emerged from e-mails that regulators seized in surprise raids on the companies.

Regulators refused to rule out returning to other parts of their probe where they had investigated Intel’s behavior in the server market and allegations of below-cost pricing designed to hurt AMD. Intel strongly denies these charges.

The EU charges also cover a time when AMD managed to take market share from Intel by launching higher performance microprocessors for servers in 2003, previously an Intel stronghold.

Intel fought back successfully by rolling out Core chips. More recently, it has grabbed more market share with Atom chips for netbooks.

EU regulators are not the only ones chasing Intel — South Korea fined the company $21 million last year.

And the U.S. may be stepping up action. The Federal Trade Commission upgraded a probe into Intel last year — and as the Obama administration is set to take a more aggressive approach against monopoly abuse by reversing a strict interpretation of antitrust law that saw regulators shun such cases.

BRUSSELS, Belgium – InBev SA formed the world’s largest brewer Tuesday when it completed its $52 billion (euro41 billion) takeover of Anheuser-Busch Cos. Inc.

The new company, named Anheuser-Busch InBev, will be headed by InBev CEO Carlos Brito and will be headquartered at Leuven, Belgium.

InBev promises to keep Anheuser-Busch’s St. Louis base as the company’s North American headquarters but the takeover ends 150 years of family rule at Anheuser-Busch. Anheuser-Busch President and CEO August A. Busch IV joins the new company’s board as a non-executive director.

Anheuser-Busch shares stopped trading Monday and will now be swapped for $70 each in cash.

The Belgian-Brazilian takeover of Anheuser-Busch comes after a bitter battle turned sweeter with a higher offer in July, despite protests in St. Louis that saw politicians criticize the deal and Web sites call for Bud to be saved from “the waffle guys.”

Anheuser-Busch provides half of America’s beer but it has not managed to expand around the world as fast as InBev — a Belgian-Brazilian hybrid that owns hundreds of local brands but few real stars.

InBev has promised to keep all 12 North American breweries open as long as the company faces no new U.S. taxes. Anheuser-Busch already plans to shed 1,185 jobs — mostly by offering early retirement and not filling vacancies.

The company did not mention a dispute with Mexico’s largest brewer Grupo Modelo — which was 50-percent owned by Anheuser-Busch. Grupo Modelo filed a notice of arbitration against Anheuser-Busch last month, saying the takeover violated their investment agreement and its right of consent to enter into a partnership with InBev.

Taking over Anheuser-Busch gives InBev a jewel of a brand in Budweiser — the world’s top selling beer — which it promises to sell more widely by pushing into emerging economies in Asia, Latin America and eastern Europe. It will sell a fifth of all beer in both Russia and China.

This will help generate growth as beer sales decline in North America and Europe where drinkers are cutting back and turning to wine and other drinks.

The new company leapfrogs SABMiller as top brewer and becomes one of the world’s top five consumer goods companies.

Brito said the combination had created “a stronger, more competitive global company with a leading international brand portfolio and distribution network, and great potential for growth all over the world.”

InBev said it now had all the regulatory clearances it needed for the deal.

China approved the takeover on Tuesday but barred the company from increasing existing stakes in Chinese brewers. It said it was necessary to prevent Anheuser-Busch InBev becoming a monopoly in the country.

This curbs future growth in the world’s most populous nation. It caps Anheuser-Busch’s 27-percent stake in Tsingtao Beer Ltd. and InBev’s 28.5 percent holding in Zhujiang Beer Ltd. They will also be prohibited from linking up with two leading Chinese breweries, Huarun Snow Beer Ltd. and Beijing Yanjing Beer Ltd.

The U.S. Department of Justice cleared the deal last week after InBev agreed to sell Labatt USA, which sells the Canadian beer in the U.S. It will hold on to Labatt in Canada. InBev did not say who would buy the American unit.

U.S. antitrust officials had worried that beer prices would increase in upstate New York because — with Budweiser and Labatt Blue — the two companies would supply most of the beer in the region.

InBev has borrowed $45 billion to pay for the deal and secured $9.8 billion in equity bridge financing that it had planned to replace with a share issue in October.

But rocky financial markets forced it to postpone issuing new shares and it says it can keep the bridge financing in place for up to six months after it closes the deal and issue shares early next year.

InBev says the company is well positioned to cope with a slowing global economy because costs for key ingredients such as grain malt for brewing beer and aluminum for beer cans will fall even as sales stall.

InBev is renowned for shaving costs since it was formed in a 2004 merger between Belgium’s Interbrew and Brazil-based AmBev.

Beer industry analysts Plato Logic says beer sales will slow significantly to expand just 3 percent next year as economies around the world shrink or stagnate.

BRUSSELS, Belgium – InBev SA on Tuesday formed the world’s largest brewer when it closed its $52 billion (euro41 billion) takeover of Anheuser-Busch Cos.

The new company, named Anheuser-Busch InBev, will be headed by InBev CEO Carlos Brito and will be headquartered at Leuven, Belgium.

InBev promises to keep Anheuser-Busch’s St. Louis base as the company’s North American headquarters. Anheuser-Busch President and CEO August A. Busch IV joins the new company’s board as a non-executive director.

The deal gives InBev a jewel of a brand in Budweiser — the world’s top selling beer — which it promises to sell more widely by pushing into emerging economies in Asia, Latin America and eastern Europe.

This will help generate growth as beer sales decline in North America and Europe where drinkers are cutting back and turning to wine and other drinks.

Brito said the combination had created “a stronger, more competitive global company with a leading international brand portfolio and distribution network, and great potential for growth all over the world.”

InBev said it now had all the regulatory clearances it needed for the deal. Last week it agreed to sell Labatts USA to win U.S. Department of Justice approval for the takeover.

U.S. antitrust officials had worried that beer prices would increase in upstate New York because the two companies would supply most of the beer in the region.

InBev did not say who it would buy the U.S. unit. It will keep its Canadian subsidiary Labatts, which is one of the top beer brands in the country.

Anheuser-Busch provides half of America’s beer but it has not managed to expand around the world as fast as InBev — a Belgian-Brazilian hybrid that owns hundreds of local brands but few real stars.

InBev has borrowed $45 billion to pay for the deal and secured $9.8 billion in equity bridge financing that it had planned to replace with a share issue in October.

But rocky financial markets forced it to postpone issuing new shares and it says it can keep the bridge financing in place for up to six months after it closes the deal.

The euro zone shrank 0.2 percent in both the third and second quarters from the quarter before, further stoking expectations the European Central Bank will cut interest rates to limit the economic damage. Two successive quarters of shrinkage is one common definition of a recession.

The spending slowdown and tight credit conditions have industry hurting across the continent: carmakers, a major source of exports in countries like Germany, said sales are slumping. Car sales in October slumped 14.5 percent in October from the previous year, the sixth consecutive monthly fall, the ACEA industry association said.

The worry is that the sharp reining in of personal spending will push the jobless rate much higher in the months to come. So far, euro-zone economies — with 16 percent of world output and 319 million people — have not seen unemployment surge, though the EU executive Commission estimates that it will rise steadily over coming months.

“The euro-zone is not immune to what’s going on in the world economy generally, and exporting nations, like Germany, are totally plugged into the fortunes of the world economy,” said Neil Mackinnon, chief economist at ECU Group. “We’re in for a pretty severe economic slump.”

Markets are pricing in the likelihood of another half-percent interest rate from the European Central Bankat its next rate-setting meeting in early December, but many analysts think that with inflation easing it should move more boldly and cut its benchmark rate a full percentage point, from the current 3.25 percent to 2.25 percent.

Cuts spur growth by reducing borrowing costs but can also make inflation worse; with oil prices easing, however, many think the downturn is dire enough to make the bank keep on cutting.

It is the first such slump faced by the ECB since the euro was introduced in 1999 and it took over interest rates for the countries using the currency.

“The clear deterioration in the economy and ongoing signs that the euro area corporate sector faces difficulties to access finance suggests that the ECB should be taking some insurance against the risks of what could turn out to be a much deeper downturn,” said Jacques Cailloux, European economist at the Royal Bank of Scotland.

The bank last cut rates a half-point on Nov. 6.

The EU confirmed that two of the euro-zone’s largest economies — Germany and Italy — joined Ireland in recession after posting 0.5 percent declines in the third quarter, and that France narrowly escaped, having expanded 0.1 percent in the third quarter after shrinking in the second quarter.

Spain contracted a quarterly 0.2 percent in the third quarter and is predicted by analysts to enter an official recession when the next quarter figures are published in early 2009 because of its slumping housing market.

The last major recession to hit European economies was in 1993 when each country controlled its own monetary policy and could react individually to economy problems. Euro-zone nations face more trouble in acting alone now and must consult the EU executive before launching major programs to kickstart the economy with deficit spending and state subsidies.

It’s not just countries using the euro that are in trouble. Estonia and Latvia — until recently part of the Baltic boom — are in recession. Britain’s economy shrank 0.5 percent in the last quarter.

Overall, the 27-nation EU has so far escaped recession — barely — thanks to growth in a number of countries in eastern Europe, such as the Czech Republic and Lithuania. The EU shrank 0.2 percent in the third quarter after zero growth in the second quarter-on-quarter.

The one bright spot on the horizon is that plummeting oil prices brought the annual inflation rate in the euro-zone down to 3.2 percent in October.

The rate of price increases has been gradually falling from a record high of 4 percent in June and July but is still well above the European Central Bank’s guideline of just under 2 percent that it looks to when it considers hiking or lowering interest rates.

On a year-on-year basis, the euro-zone grew 0.7 percent, down on the 1.4 percent recorded in the second. For the full 27-member EU, growth more than halved on a year-on-year basis to 0.8 percent in the third quarter from 1.7 percent in the second.

By Aoife White, Pan Pylas

Confidence among consumers and in the construction, industry, retail and services sectors fell to 89.5 in July, the lowest level since March 2003 and the sharpest month-to-month slip since the Sept. 11 terror attacks, according to an EU economic sentiment survey.

Italy and Britain saw sharp drops in confidence with France, Germany and the Netherlands also more downbeat about the future.

The European economy is slowing as soaring fuel and food prices slam the brakes on growth, and amid tight borrowing conditions triggered by the global credit crisis and a slowdown in major trading partners, Britain and the United States.

The EU figures add pressure on the European Central Bank to hold off from further interest rate increases. In an effort to cool record-high inflation, it raised its key borrowing rate from 4 percent to 4.25 percent in June.

Central banks usually cut rates to boost growth and raise them to calm inflation. But Europe and many other regions are seeing their economies lose pace while prices shoot up.

And worse times may lie ahead. Consumer confidence worsened again in July, the EU survey showed. This hits household spending, once the main engine of the euro-zone’s economic expansion as people shell out for fewer big items or luxury goods as they spend more on gas and groceries.

Consumers are also far more worried about unemployment in the near future, according to the survey. The euro jobless rate started in April to climb above a record low, lengthening welfare lineups that are among the longest in the industrialized world.

The results were “even more dismal than expected,” said Holger Schmieding, chief European economist at Bank of America.

“The euro-zone economy has fallen into semi-stagnation,” he said. “The risk of a recession later this year is no longer negligible.”

A separate EU survey of industry managers, the euro-zone business climate indicator, also dropped in July to minus 0.21 — snuffing out one of the few bright sparks as manufacturing stops compensating for other struggling sectors of the economy.

“The low level of the indicator suggests that economic activity in industry, which saw a fall in production in May, remains subdued,” the EU said.

Managers expected less production, lower order books and fewer exports in coming months.

Anheuser Busch Cos. said early Monday it had agreed to a sweetened $52 billion takeover bid from Inbev, heading off what had promised to be a long and acrimonious fight for the maker of Budweiser and Bud Light beers.

The deal would create the world’s largest brewer and the fourth-largest consumer product company under the name of Anheuser-Busch InBev.

The board of directors of Anheuser-Busch Cos. Inc. on Sunday accepted a sweetened takeover offer from Belgian brewer InBev SA, according to a joint press release.

“This combination will create a stronger, more competitive global company with an unrivaled worldwide brand portfolio and distribution network, with great potential for growth all over the world,” Carlos Brito, CEO of InBev, said in the statement.

For InBev, the maker of Stella Artois and Beck’s, the deal gives an aggressive company an iconic beer brand — Budweiser — to sell into emerging markets where it has already established a firm footprint.

InBev is the world’s second-largest beer-maker behind SABMiller. Anheuser-Busch is by far the largest brewer in the U.S. with more than 48 percent of the market share.

Brito will be chief executive officer of the combined company. Shareholders will receive $70 a share, a $5 increase over the offer Anheuser-Busch rejected in June.

It wasn’t immediately clear how long approval might take. Several Missouri politicians have expressed concerns about the merger — especially how it would affect the approximate 6,000 people employed by Anheuser-Busch in St. Louis.

It also drew the attention of Mexico’s Grupo Modelo. Anheuser-Busch owns a 50 percent share in Grupo Modelo, which said in a statement Monday that its relationship with Anheuser-Busch gives it consent rights to the deal.

“Our agreement with Anheuser-Busch was carefully constructed to ensure we have a definitive say in who our partner is. We are confident that our agreement, which is governed by Mexican law, gives us the right to decide whether or not to consent to the potential acquisition of Anheuser-Busch by InBev,” Grupo Modelo said in a statement.

Grupo Modelo said it had been talking with InBev about how the two brewers could work together if InBev became a minority owner of Grupo Modelo by buying Anheuser-Busch.

InBev said it plans to use St. Louis as its North American headquarters, and that it will keep open all 12 of Anheuser-Busch’s North American breweries.

InBev announced its intent to try to purchase Anheuser-Busch on June 11. The Anheuser-Busch board initially voted against the merger, calling the initial $65 per share offer too low.

That prompted much squabbling between the companies over the past few weeks. InBev filed a motion seeking the removal of all 13 Anheuser-Busch board members; Anheuser-Busch filed suit calling the InBev effort an “illegal scheme” that threatened to defraud Anheuser-Busch shareholders. Among other things, the suit noted that InBev failed to disclose it operates a brewery in Cuba.

Few products are associated with America as much as Budweiser. Its Clydesdale horses are fixtures of Super Bowl ads, and even the label is red, white and blue, with an eagle swooping through the “A.”

“This agreement provides additional and certain value for Anheuser-Busch shareholders, while enhancing global market access for Budweiser, one of America’s true iconic brands,” August Busch IV, Anheuser-Busch president and CEO, said in the statement.

The deal, if completed, also will bring to an end a name synonymous with St. Louis. From college buildings to theme parks to offices to the stadium where the Cardinals play baseball, the Busch name is virtually everywhere in the Gateway City.

Eberhard Anheuser acquired the Bavarian brewery in 1860 and renamed it E. Anheuser & Co. His son-in-law, Adolphus Busch, joined the company in 1864 and it was eventually renamed Anheuser-Busch.

The company survived Prohibition by selling products ranging from ice cream to root beer.

In addition to opposition from politicians and civic leaders, at least two Web sites sprung up opposing the merger. SaveBudweiser.com claims to have more than 60,000 signatures from merger opponents. SaveAB.com hosted a recent anti-merger rally that drew hundreds to downtown St. Louis.

InBev has not said if layoffs will occur as a result of the merger. The company said it expects cost synergies of at least $1.5 billion a year by 2011 over three years. The deal won’t benefit earnings per share until 2010, it said.

Even without the combination, Anheuser-Busch said last month it planned to cut pension and health benefits for salaried employees as part of an effort to slash $1 billion in costs by the end of 2010. The plan called for offering early retirement to 1,300 salaried workers 55 and older.

The cost-cutting effort was part of a strategy to fend off the merger.

By Aoife White, Christopher Leonard

BRUSSELS, Belgium – Most European exporters are not yet feeling the pain of the strong euro, an EU official said Tuesday — even as aircraft maker Airbus, which sells its planes in dollars, called the level “unbearable.”

Luxembourg Prime Minister Jean-Claude Juncker, who leads monthly economy talks between the 15 nations that use the common currency, said he did not see the high euro hurting the European economy “for the time being.”

The euro reached a record $1.5912 on Thursday, which makes German cars and French champagne more expensive for American customers or forces exporters to squeeze their margins. It also has an upside for Europe because it helps ease inflation by reducing the cost of dollar-priced oil imports.

“For the time being we don’t have a too huge impact on the real economy,” Juncker said, but refused to say what level would hurt European exporters. “The export sector is developing quite well. The moment will come where the exchange rate level will start to cause serious harm to the European economy.”

Record sales figures from Europe’s biggest automaker Volkswagen AG show the trend. VW said Tuesday it saw its best-ever quarterly car sales in the first three months of this year, despite the dampening effect of the exchange rate. Sales to the U.S. fell slightly, though that was more than offset by surging demand in China and Brazil.

Trade figures from last year show that euro nations, which include France and Germany, saw sales to the U.S. and Japan slip slightly last year — but increased exports to most other major trading partners last year.

But companies that rely on dollar-denominated sales — such as Airbus — are feeling considerably more pain.

The strong euro is a “sword of Damocles” starting to fall on the company, said Louis Gallois, chief executive of Airbus’ parent European Aeronautic Defence & Space Co.

“We are at levels which are becoming unbearable,” he said, warned that it could force the company to shift more of its costs into dollars by moving production outside of the euro area and making acquisitions in dollar-based countries.

Gallois said he wants to transform EADS North America — part of a consortium that topped Boeing Co. to win a $35 billion contract with the U.S. Air Force — into an “enduring supplier to the Pentagon.” That means meeting U.S. security requirements and gaining strength through acquisitions and investment in sites, he said.

For Airbus, which sells its planes in dollars while many of its costs are in euros, each 10-cent rise in the euro against the dollar costs 1 billion euros ($1.59 billion).

The strength of the euro also hit investor confidence in Germany, the biggest economy that uses the currency and the world’s biggest exporter. The closely watched ZEW survey showed an unexpected decline this month as rising inflation, the euro’s high level and high oil prices dashed expectations.

Juncker said he was confident U.S. officials realized that a strong dollar was in the interest of the American economy.

But the weakness of the dollar does make U.S. exports more attractive to other nations.

Juncker also said he hoped that currency traders were listening to comments made by the world’s seven leading industrial nations at talks in Washington last weekend, and pay more attention to long-term economic trends rather than speculating on short-term data.

“I sincerely hope that in a certain amount of time from now financial markets (would be) … stepping away from one way bets and they are taking into account longer perspectives, economic fundamentals, and that they are less driven by short-term economic information.”