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European Union Competition Commissioner Neelie Kroes defended the record fines levied against companies during her tenure as the EU's top antitrust cop, saying the large penalties are deterring anticompetitive actions.

"We are starting to achieve effective deterrence with fines," Kroes said Thursday, addressing a conference on international antitrust at Fordham University.

"Never underestimate the effect of large fines," she said.

During Kroes' term with the European Commission, the antitrust division of the EU imposed stiff penalties on companies found to have participated in anticompetitive practices.

Earlier this year, the commission fined chip giant Intel Corp. (INTC) EUR1.06 billion ($1.55 billion), the largest penalty ever levied in the EU for anticompetitive practices.

Intel is in the process of appealing this decision.

Kroes' term as competition commissioner ends in two months. During her tenure, the EU has taken a particularly hard look at competition in the technology sector, also levying fines against Microsoft Corp. (MSFT). More recently, the EU extended a review of the $7.4 billion acquisition of Sun Microsystems Inc. (JAVA) by Oracle Corp. (ORCL), after the U.S. Department of Justice approved the deal.

Oracle Chief Executive Larry Ellison has said the delay is costing $100 million a month, and rivals have begun moving to attack Sun's market share.

Kroes mentioned throughout her remarks to the gathering of antitrust lawyers and international regulators that she has had constructive discussions with U.S. antitrust enforcer Christine Varney. On the sidelines of the event she declined to speak directly on the potential reasons for the disparity between the two antitrust enforcers regarding the Oracle-Sun review.

Kroes' speech centered on the issue of state aid to businesses in regards to competition. She said that allowing companies to become addicted to state aid is unacceptable and a recipe for trade war, among other things.

While talking about state aid generally, Kroes briefly mentioned Adam Opel GmbH. Germany has promised EUR4.5 billion in aid to Opel, part of the European operation of General Motors. But the commission has issued repeated warnings to Germany that it will scrutinize any aid provided to the carmaker to ensure it follows the EU's strict rules on state aid.

"Europe's car companies are producing more cars than the European market warrants," Kroes said, adding that an industry divorced from an understanding of its customers is not sustainable.

Meanwhile, Kroes defended the U.S. government's intervention in the financial system.

"I think the policy makers here in the U.S. have done well to stabilize the banking and insurance centers," she said, though having a centralized system from the outset could have helped with stabilizing the market.

- By Jerry A. DiColo, Dow Jones Newswires; 212-416-2155; jerry.dicolo@dowjones.com