Monday, May 11th 2009
EU Completes Intel Antitrust Case Investigations, Likely to Find it Guilty: Sources
The European Union trade regulatory body is expected to announce its verdict on the high-profile antitrust case against Intel on Wednesday. The company has been booked under charges relating to market malpractice, by influencing computer hardware manufacturers to postpone and/or cancel launches of their products that use CPUs made by its rival AMD. Intel allegedly abused its market position in the CPU industry, to cripple the growth of AMD in Europe, by offering special rebates to computer hardware manufacturers to restrict or eliminate the use of AMD processors. The company allegedly even influenced retailers by offering inducements to sell computers only with Intel processors installed.
The first violation by Intel is that it allegedly set set percentages of its own chips that it wanted PC makers to use, according to sources. Examples include NEC, which was told that only 20 percent of its products could use AMD processors. All Lenovo-made notebooks use Intel processors, while 95% of HP's product-line features Intel processors, sources said.
The second violation was where Intel bribed PC makers to delay or scrap the launch of their products that feature AMD processors, to favor Intel best. The Commission will characterize the payments as "naked restrictions" to competition, the sources said.
When found guilty, the commission will take two forms of action against Intel. A date will be set, following which, Intel cannot offer the rebates and other inducements EU finds illegal. A fine will also be collected from Intel. The commission can charge as much as 10% of Intel's annual revenue as fine, which was $38 Billion in 2008. The trade commission's decision set for Wednesday is said to be extremely complex and lengthy, in order to safeguard the antitrust enforcer against any possible legal challenges from Intel, which is likely to face one of the highest fines in Europe's antitrust history, according to Brussels-based lawyers. Intel's trouble in Europe began in 2000, when AMD complained that Intel was blocking its access to the European market.
Sources:
Reuters, The Wall Street Journal
The first violation by Intel is that it allegedly set set percentages of its own chips that it wanted PC makers to use, according to sources. Examples include NEC, which was told that only 20 percent of its products could use AMD processors. All Lenovo-made notebooks use Intel processors, while 95% of HP's product-line features Intel processors, sources said.
The second violation was where Intel bribed PC makers to delay or scrap the launch of their products that feature AMD processors, to favor Intel best. The Commission will characterize the payments as "naked restrictions" to competition, the sources said.
When found guilty, the commission will take two forms of action against Intel. A date will be set, following which, Intel cannot offer the rebates and other inducements EU finds illegal. A fine will also be collected from Intel. The commission can charge as much as 10% of Intel's annual revenue as fine, which was $38 Billion in 2008. The trade commission's decision set for Wednesday is said to be extremely complex and lengthy, in order to safeguard the antitrust enforcer against any possible legal challenges from Intel, which is likely to face one of the highest fines in Europe's antitrust history, according to Brussels-based lawyers. Intel's trouble in Europe began in 2000, when AMD complained that Intel was blocking its access to the European market.
82 Comments on EU Completes Intel Antitrust Case Investigations, Likely to Find it Guilty: Sources
"We would be better off if we didn’t have them at all, if we could get rid of them. But we do have them" -- what does that even mean? Are they simply waxing poetic about a perfect world?
Be they flawed or not, the fact that there are still people existing who want to see an end to things like antitrust laws scares me, especially since we have more than century's worth of evidence showing just how evil companies can become once they get too large.Oh, and Intel forcing computer makers not to buy AMD chips at all (even if they're a good bargain) at risk of losing Intel's good graces didn't hurt the situation for AMD any?
You're both wrong -- lax regulation has been the demise of AMD.
Intel is fully aware of this and they still chose to brake these laws. As such, they should pay the price.
The demise of AMD is their 15 year reliance on Intel followed by another 15 years of mediocre products (Athlon 64 was the only exception only because the P4 was pushed way too long). Then we have the stupid business decisions like buying ATI when AMD was already heading for hard times. That in turn caused the GPU-on-CPU race AMD couldn't afford to fight in the first place. Stupid move after stupid move after stupid move--the story of AMD. It's shocking they didn't fall under back in the 1980s.
But i don't agree that buying ATI was a stupid move. It will help them with fusion for sure, and if anything they've benefitted quite a bit as who know's if ATI's HD 4XXX series would be delivering good performance like it is now if AMD hadn't bought it as i'm sure AMD made some changes to ATI's plans for their future GPU's. Hence we have great results now, and it helped AMD's profits. ATI purchase was a smart move imo, though i disagreed with it at the time.
Intel doesn't need to "force" anyone with threats of broken kneecaps and bricks through windows -- this isn't TV.
Let's say you're a computer manufacturer. You have 100,000 orders for computers you need to fill. AMD is able to provide 20,000 chips to you -- Intel can provide as many as you need.
Now, you could just buy all your chips from Intel -- sure, why not. But hey -- AMD comes along and says, "We know we don't have the capacity to provide all 100,000 chips you need -- but we'll provide 20,000 very fine and fast chips to you at a comparable price with Intel."
You, as the computer manufacturer, sees this as a good deal -- you can gets the chips you want from both companies, and have them both compete over prices to court you, their customer.
This is where the fair market ends and crooked monopolistic practices begin.
Instead of just being happy with 80% of your business, Intel tells you, "you will buy all of your chips from us."
You say, "no way, I can buy from who I want to."
Intel then tells you, "if you continue to buy chips from AMD, we will stop selling you any chips, or we will raise our prices so much for you that you'll suffer."
And now, Intel has in effect "forced you" to buy only from them. You have 100,000 orders to fill -- AMD can only provide 20,000. You could buy some chips from Intel and some from AMD, but if you Intel refuses to sell you chips at a good price, you won't be able to fill those other 80,000 orders, and your business will suffer or even go out of business!
Do you see what I'm getting at?
Intel is hurting the free market with their practices. If you truly believe in and worship the free market, you should agree that they need to be punished.
38/100=.38
.38x60=22.8
22.8 billion
I see nothing wrong with that. That's the definition of a free market.
However, there's something wrong with what you're saying. The EU is accusing Intel of selling their product at a loss to maintain market share. That sounds all well and fair, but that doesn't protect you, the customer. Intel is large enough to do that and completely drive AMD and everyone else out of business, since they have the capital to run at a loss for probably years on end. When everyone else goes out of business, do you think prices are going to remain low and reasonable?
I'm all for competition, but practices like that where the company is losing money in an effort to drive competitors out of business is bad for all of us.
Once you considered that i doubt you want them to leave and just pay the fine, behave for a few years and then go back to business as usual.
The shear size of the EU and the shear mountain of logistical work there has to be done is astronomical - no wonder the report will be "x" hundreds of pages long - think of how many countries are in the EU, speaking different languages, and now consider how many retailers there are in each country. No wonder the document is going to be massive.
Toward the legal side of things, although most countries except the EU laws many still do not abide by them. The UK has the LARGEST DNA/capita database in the world and it has been proven that if half (if not more) of those samples are against the human rights act. What needs to be seen here is just where in the EU these charges are being brought, and just WHO decided that they needed to be. This isn't some way of making a quick buck, again i ask you to realise how big the EU is, 10% of $38billion (IIRC) isn't going to do squat for the countries - it'll be most likely used to fund some kind of program to refund the retailers/ other companies that lost out to intel. Who is to say that the only other company is AMD, what about VIA?
Finally, this should have been brought about by AMD/VIA and not the EU, whether it was and the EU are just fronting it i don't know. I have yet to see any evidence and therefore can not make an informed decision.
it doesnt work here :p