But Intel described the ruling as "wrong", and vowed to fight it with an appeal in European Union courts.
The antitrust fine is the biggest imposed on a single company, exceeding last year's $1,223m monopoly abuse penalty against Microsoft.
The commission said Intel had paid rebates to computer manufacturers for buying all or most of their x86 computer processing units (CPUs), and also paid them to stop or delay the launch of computers based on AMD chips.
Regulators also accused the company, whose microprocessors power 80 per cent of the world's personal computers, of paying a major electronic retailer to stock computers with its chips.
Paul Otellini, Intel's chief executive officer, said: "We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace".
"There has been absolutely zero harm to consumers. Intel will appeal," he said.
But Giuliano Meroni, AMD's Europe president, said the EU order would "shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers".
EU regulators have been investigating Intel since it received complaints from AMD in 2001, and filed formal antitrust charges against the company in July 2007 and in July 2008.