Intel hit with record $1.45 Billion antitrust fine

[Denholm]

On Wednesday May the 13th of 2009 the European Commission fined Intel €1.06 Billion ($1.45 Billion) for bribing computer makers to postpone or cancel plans to launch products featuring AMD chips, paying illegal rebates in secret, and paying major retailers to stock only computers with Intel chips.

In short, Intel was fined for having a monopoly.

http://www.foxbusiness.com/story/markets/industries/technology/intel-appeal--billion-fine/


In a way I think it's great, in others I think it will hit the consumer. If the fine sticks, this is the break AMD needed.

[Getback]

Dirty dirty dirty if it's true.

[Kazaa]

OWNED!

[Chalenge]

I believe Intel was using its larger share of the market to price competition out of the running and I dont see that they were 'paying businesses to only stock Intel' but I guess it could be interpreted that way. Sounds more like picking sides than it does justice.

[Kev367th]

I believe Intel was using its larger share of the market to price competition out of the running and I dont see that they were 'paying businesses to only stock Intel' but I guess it could be interpreted that way. Sounds more like picking sides than it does justice.

Wrong,
Here is part of the press release from the commission -

Intel gave rebates to computer manufacturer A from December 2002 to December 2005 conditional on this manufacturer purchasing exclusively Intel CPUs

Intel gave rebates to computer manufacturer B from November 2002 to May 2005 conditional on this manufacturer purchasing no less than 95% of its CPU needs for its business desktop computers from Intel (the remaining 5% that computer manufacturer B could purchase from rival chip maker AMD was then subject to further restrictive conditions set out below)

Intel gave rebates to computer manufacturer C from October 2002 to November 2005 conditional on this manufacturer purchasing no less than 80% of its CPU needs for its desktop and notebook computers from Intel

Intel gave rebates to computer manufacturer D in 2007 conditional on this manufacturer purchasing its CPU needs for its notebook computers exclusively from Intel.

Furthermore, Intel made payments to major retailer Media Saturn Holding from October 2002 to December 2007 on condition that it exclusively sold Intel-based PCs in all countries in which Media Saturn Holding is active.

A, B, C and D are widely regarded as being Dell. HP, NEC. Lenovo, Acer (not neccessarily in that order).

The commission seen nothing wrong with rebates, Intel can continue to give them, however they may not attach such conditions to them.

Press release here -
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/745&format=HTML&language=en

You can read the true extent of Intels tactics.

Bear in mind this is now the third country to find Intel guilty, with the U.S. likely to be the next.

[Chalenge]

So far you have a press release and a court judgment and in todays world neither one alone or together is proof of any wrong doing (hate to say it actually). I dont see anything wrong with a price structure like the one Intel suggested.

[Kev367th]

Surely you can see the difference between -

a) I will give you a 20% discount.
and
b) I will give you a 20% discount but you may not use any competitors products.

As the E.U. is now the third country to find Intel guilty, I would suggest there is more than enough evidence to show it.

As the U.S. and E.U. shared information on this, whats the odds that Intel aren't that far away from a 4th guilty verdict (in the U.S.), plus perhaps the biggest fine of all.

The fallout from it all should prove to be interesting.

[edit]As for proof - from the release:
"The Commission obtained proof of the existence of many of the conditions found to be illegal in the antitrust decision even though they were not made explicit in Intel’s contracts. Such proof is based on a broad range of contemporaneous evidence such as e-mails obtained inter alia from unannounced on-site inspections, in responses to formal requests for information and in a number of formal statements made to the Commission by the other companies concerned. In addition, there is evidence that Intel had sought to conceal the conditions associated with its payments."

Not only they have proof, but Intel attempted to hide the truth, i.e. the mysterious lost/accidently destroyed emails.
Looks like a duck, walks like a duck, quacks like duck - ................?

[USRanger]

Intel should call Bill Gates on how to side slip such things.

[Infidelz]

EU just hit an American company with a 1.45B tax and you think that is great? What am I missing? Maybe you want the company destroyed and put out of business? That would be great huh? We could have the Government take it over like everything else? Maybe you want them to wind up like GM or Chrysler and we would be stuck with crappy AMD processors?

Let us know what your hopes are for all the intel workers. Maybe we could get them jobs running the Union of California Socialists Republic which is bleeding the rest of the country dry.

Infidelz.

[Krusty]

Since when is a conditional price illegal?

My local store has a price club. I can buy 1 pack of cookies, or buy 2 and the second is free. But that does NOT mean the first one is half off. It's conditioned on the purchase of 2 packs.

So I go to ANY number of places online or in person, and they have discounts based on bulk purchases. You buy 1, and it's full price... you buy 10 it's full price.... But maybe you buy 1000, you get 20% off (major savings, mind you).

It's NOT illegal to put conditions on rebates or discounts. In fact it's the way every company in America works about now, to one degree or another.


Pretty thin "proof" if ya ask me.

[Vulcan]

and we would be stuck with crappy AMD processors?

Err the P4 series was a pretty awful processor, the AMD's ran rings around it. If AMD drop out intel will go back to it's old ways, crap cpu's at high prices.

[MrRiplEy[H]]

It's NOT illegal to put conditions on rebates or discounts.

It is if you're in a dominant marketing position and the conditions are about selling a competing product. As the article said the rebates are not the culprit, the use of capital to force the competition out of the market is.

[Krusty]

So you say to somebody "You know what? You buy only my stuff, I give you a big discount!" and that's illegal?

Taking NO consideration of the SIZE of the vendors, there's no monopoly unless they do that with ALL vendors. In a case by case basis, there is nothing inherrently wrong doing this. It's just a business deal.

Now if they say "do this or else we shut you down with every business partner we ever know or ever will" then it's monopoly. If you threaten something bad in the event the companies don't buy your stuff, that's bad.

One's a threat, one's a reward.

Rewards are not mandatory, are offered as a sweetener to a deal.


You ask me the only reason this is an issue is Intel still has deep pockets. ANY other company and this would never have come up (except in the entire EU, cash starved and doing even worse than the USA right now, if you can believe it).

I say this objectively. I'm no giant Intel fan, other than loving the c2d chips they put out. I like competition between them and AMD for the already-specified reasons in this thread

[Vulcan]

So you say to somebody "You know what? You buy only my stuff, I give you a big discount!" and that's illegal?

Depends, if you sell it below a profitable level with the intent of destroying your competitor so that later you can dominate the market then yes. I believe the term is predatory pricing.

I wouldn't get all high and mighty about the EU either, the USA squeels loud enough when it think's someone's doing something shifty to their markets (steel, grain, etc).

[MrRiplEy[H]]

Yep it's very common for a company that's in a dominant position to misuse that position by underpricing or giving away their products with the intent of killing away the competition. Once the competition has been forced out of the market the monopole can price the products as they wish and cut down r&d costs.

So this hurts both the consumers and business - consumers get no selection and a stagnant development and business hurts when competing companies can't get a foothold. Which is why this kind of stuff has been made illegal.