The European Commission will drop its antitrust probe of Intel after concluding that complaints it received toward the end of 2000 from two rivals proved groundless, said a source close to the inquiry on Friday.

Part of the reason the processor maker was investigated in the first place was over its 'Intel Inside' marketing campaign. Contrary to popular belief, Intel doesn't demand the image and tune be played or displayed in advertising — it does, however, pay towards adverts that feature its snippet.

The EC's move would mirror the outcome of a similar investigation of Intel in the US, which was dropped by the Federal Trade Commission in September 2000.

"The intention is to close the [EC's] inquiry," the source revealed on condition of anonymity. "After careful analysis of the complaints the Commission has decided that the accusations are unfounded."

When the investigation into Intel came to light last April, the EC said that dominant companies must be careful how they use loyalty schemes with their customers.

But our source said on Friday that "this doesn't mean that a dominant company cannot grant rebates to loyal customers".

The identity of the companies that sparked the probe by the EU competition regulator have never officially been revealed, but are believed by industry insiders to be AMD and Via Technologies, which recently had a long-running patent spat with Intel.

AMD and Via Technologies said last year that they provided information to the EC during its probe of Intel, but both companies have declined to comment on whether they made the complaints that sparked the probe.

The complaints charged Intel of abusing its dominant position by tying in customers with loyalty schemes and co-funding PC makers' marketing campaigns as long as the ads featured the 'Intel Inside' logo. Intel says this joint marketing program works with 1,500 companies worldwide, 800 of which are in Europe.

The complaints also alleged that the company competed unfairly by selectively licensing the design of system buses and other technologies that link chips with various computer components. They charged that this created compatibility problems for rival chip makers.