The European Commission has accused Intel of using illegal rebates to push rivals out of the computer processing unit (CPU) market. The CPU serves as the brain of a personal computer.

The California-based company holds a dominant position in the market for x86 CPUs, a market that is worth around 22-billion-euros. Intel, the world's biggest chipmaker, held a 70-percent market share during the five years in which it stands accused of breaking EU antitrust regulations.

"The commission found that Intel abused its dominant position in the computer chips market," European Competition Commissioner Neelie Kroes said at a press conference in Brussels.

"Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," she added.

Kroes said that Intel had gone beyond normal price competition by giving rebates to computer manufacturers on the condition that they bought all, or almost all, of their CPUs from Intel.

EU antitrust regulators also accused Intel of paying computer manufacturers to halt or put off the launch of products containing microchips competing with Intel's x86.

In addition, Intel allegedly paid MediaMarkt, a major German electronics chain store, to stock computers with its chips.

The European Union's executive branch formally launched its anti-trust probe into Intel in 2001, after rival chipmaker Advanced Micro Devices filed a complaint.

"Such a serious and sustained violation of the EU's anti-trust rules cannot be tolerated," Kroes said.

Intel has announced its intention to challenge the decision in EU courts.

The fine is the largest of its kind in EU history, topping the 899 million Microsoft was ordered to pay last year, for failing to cooperate with the European Commission in its antitrust investigation.