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After years of accumulating evidence, the European Union sets its antitrust crosshairs on Intel

After years of investigating Intel’s trade practices against AMD, the European Commission officially filed formal charges against the chip-making giant, as detailed in a statement of objections (SO) filed to the company today. “I can confirm the statement of objections has been sent,” said European Commission spokesman Tom Van Lierop, offering no further comment.

The European Commission raided Intel’s offices in 2005 on suspicions of anticompetitive activities. In 1999, Intel settled charges with the US Federal Trade Commission, and a later investigation by the FTC in 2000 was dropped. In 2004, the Fair Trade Commission in Japan raided Intel’s Japanese office, and in 2006 the Korean Fair Trade Commission raided Intel’s office in Seoul. Both raids were conducted as part of antitrust investigations in their respective countries.

In the United States, AMD sued Intel in June 2005 on charges of coercion and anti-competitive practices, running full-page ads in several US newspapers. “You may not be aware, but Intel’s illegal actions hurt consumers – everyday,” read the ad, pointing to a 48-page complaint (PDF) on AMD’s web site.  Today the lawsuit is still working its way through the courts, with additional lawsuits pending in South America and other jurisdictions.

AMD enjoyed a surge in market share in 2005 and 2006 with its Opteron and Athlon 64 line of CPUs. However, with the launch of Intel’s heralded Core 2 line of CPUs in July 2006, AMD found itself losing much of the traction they had previously gained. At the end of 2006, AMD’s market share was 25% of all shipments for x86 processors, but by March 2007, that number slipped to less than 19%.

While AMD’s stock price has fallen, Intel’s has risen. Between slipping market share, the acquisition of Canadian GPU manufacturer ATI, and yet another round of substantial price cuts from Intel, AMD has found itself in a difficult place: while its most recent earnings report posted a 13% rise in quarterly revenue, those same figures also included losses of $600 million.

According to Intel’s Principles for Responsible Business (PDF), “Intel encourages competition, which benefits consumers by prohibiting unreasonable restraints on trade. Intel competes vigorously while at the same time adhering to both the letter and spirit of antitrust laws.”

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It's about time.
By athlonxp2200 on 7/26/2007 11:56:13 PM , Rating: 5
Don't get me wrong, I'm not a "fanboy" or anything, but I'm so glad this is happening to Intel now. It's defiantly hurting AMD a great deal which is obviously bad because it seems like lately it's causing Intel to become a monopoly.

They had this coming with all the things I've read they've done. Not very good business practices bribing companies such as Dell not to sell AMD powered computers. Just image how much that "tactic" could help a company.




RE: It's about time.
By RyanHirst on 7/27/2007 12:20:02 AM , Rating: 2
... but it seems to me there is a much more straightforward reason that AMD is hurting right now:

Core 2.

If you're watching a boxing match, and your guy is getting turned into pulp, it strikes me as a bit myopic to say, "that divorce is really hurting Joe right now." I'd say that getting beat the f- up is hurting Joe.

Whatever it's done in the past, and whatever the ramifications continue to be to this day... getting crushed by the superiority of Core2 is what's definite about AMD's pain right now.

Considering the unresolved nature of the court case (and the impossibility of deriving a false conclusion from false data*), I would categorize the harm to AMD as both hypothetical and indefinite.

Liking a company doesn't suspend the ability to reason.
signed,
-an AMD fanboy

(* e.g.: "if Intel hadn't done X, things would be Y right now", where intel did X, and things aren't Y)


RE: It's about time.
By RyanHirst on 7/27/2007 12:22:57 AM , Rating: 2
by "whatever it's done in the past and whatever the ramifications....", I meant the postulated monopolistic practices.
Sorry. Grammar go kaboom.
P is for _____
and that is good enough for me.


RE: It's about time.
By Polynikes on 7/27/2007 12:50:48 AM , Rating: 2
While AMD's not doing well now is certainly very much due to the Core 2, Intel has been doing a lot of shady shit with the Dells of the world to make sure their product sells better. They've done a lot of stuff like withhold chipsets from motherboard manufacturers who weren't playing by their "lets kick the shit out of AMD" rules in order to make them later to market than the "good guys." Don't get me wrong, I was all about getting an AMD FX-60 until I saw the numbers for the Core 2s, but decided to wait, and now have a Core 2. I just think that Core 2 isn't 100% the reason AMD has been having problems for so long. They'd probably be much stronger if it wasn't for the stuff Intel did or is still doing.


RE: It's about time.
By masher2 (blog) on 7/27/07, Rating: 0
RE: It's about time.
By Phynaz on 7/27/07, Rating: 0
RE: It's about time.
By ZmaxDP on 7/27/2007 12:08:43 PM , Rating: 2
Hehe....

Seriously though, IF Intel actually bribed people to not use AMD proccessors, that IS also illegal. Most of the other stuff I could care less about. That one issue is legitimately worth investigating.

We can't say that practice hurt or helped consumers because we don't know what the outcome would have been had it not been done, or even if it was done at all. That's what an investigation is for. Perhaps we should wait to make up our minds until the evidence comes out. Too much speculation going on...


RE: It's about time.
By masher2 (blog) on 7/27/2007 1:04:36 PM , Rating: 1
> "We can't say that practice hurt or helped consumers because we don't know what the outcome would have been had it not been done"

You judge by the effects on the marketplace. By that touchstone, the effect on the consumer was nothing but positive. During the period in question, competition and product availability increased markedly, prices declined sharply, and new products were introduced at a dizzying pace.

Claiming it might have been "even better" is an argument that not only lacks any and all proof, but misses the point entirely. The CPU market during this period was arguably the healthiest, most vibrantly competitive in all history. Do you honestly think government action is going to help the situation, rather than hurt it? History demonstrates otherwise.


RE: It's about time.
By Oregonian2 on 7/27/2007 4:44:23 PM , Rating: 3
Hmmmmm.... if one steals from the wealthy does that make it "okay" if the wealthy is getting even wealthier during the time of theft?


RE: It's about time.
By TomCorelis (blog) on 7/27/2007 4:58:03 PM , Rating: 4
I disagree somewhat. I think it's very clear that Intel's pricing moves were direct attacks against AMD, and preparatory moves towards the eventual establishment of a monopoly. Sure, it was good for consumers, and right now it still is, but for all we know it's a Trojan Horse by Intel to get a lock on their market. Just because we're in paradise doesn't mean we shouldn't be aloof.

Case in point: EB/gamestop. In used games, the two used to compete fiercely with each other, and it was a boon to consumers. Games were cheap and plentiful! EB Edge card made them cheaper. The games were sold above cost and the two companies still made a ton of money. Now, after the merger, EB/Gamestop's used game pricing seems to be MSRP minus $5 for all but the worst-selling and most-traded-in titles. Trade-in rates have stayed the same, if not fallen. The Edge card now costs double, with the discounts not fully making up for the spike in used game prices, meaning that to break even on the blasted card one has to buy 50% used more games from the store.

Take a page from the drug dealers' tactics: give it to them cheap or free til they're hooked, then when you've got them under your thumb shaft em for all they're worth.

Textbook economics.


RE: It's about time.
By masher2 (blog) on 7/27/2007 7:57:44 PM , Rating: 2
> "Sure, it was good for consumers...."

And that's all that matters. Wild-eyed prophecies about some dim, misty future when Intel, gloating over having driven all other competitors at bay, begins rising prices without mercy are just that-- nonsense.

Modern history records no instances of predatory pricing being successful. Companies have often tried, none ever succeeded. They always wound up harming themselves more than their competitors. On the other hand, there are many instances of companies who, after driving out competition through low prices, KEPT prices low, to the long-term benefit of consumers. Only after antitrust legislators stepped in to "help" the situation and break up the firm did prices rise. Two famous examples here being Standard Oil and Alcoa Aluminum.

> "and right now it still is, but for all we know it's a Trojan Horse by Intel to get a lock on their market"

You don't convict someone of a crime based on "for all we know." The evidence here says otherwise. Intel's actions benefitted consumers, plain and simple. The EU spent several years and millions of Euros investigating...and in the end, even they admit their case rests largely on supposition and conjecture. You can always tell a weak, politically-motivated case by the actions of the prosecutors. Had real crimes been committed, there would have been swift, immediate action.

> "Case in point: EB/gamestop."

This is an extremely poor example, given the thousands of other competitors that exist, online, and locally in the form of chains such as Walmart, in addition to local, independent stores. If you're trying to suggest that game prices have risen because EB now holds a monopoly-- the attempt falls flat.


RE: It's about time.
By Hawkido on 7/31/2007 4:13:26 PM , Rating: 2
Sorry masher... I gotta disagree with you. Not so much out of principal but more out of differing economic philosophy.

<My Philosophy>
If the consumer benefits due to a specific practice then it is good for economic society. However if that benefit is temporary, and only used to eliminate the cause of the benefit (e.g. competition) which later leads to the follow-up practice that negatively impacts economic society, then the original practice needs to be stopped.
</My Philosophy>

If AMD fails and intel becomes the only supplier, they will develop a proprietary system, that you will not be able to break away from with out going into untested/unprooven territory. No business will do that, I know... I tried to get the USAF to more to 4 socket dual core Opterons instead of 4 xenon CPU's with hyper threading. The opteron system was cheaper, more powerful, and used less energy. The USAF didn't want to use a vendor that wasn't top tier. Why didn't Dell produce a AMD server (USAF had just went all Dell at my base, I personally didn't like them, they made horrible Exchange servers).

Now, Dell has an AMD line of servers, but only after Intel has a better CPU on the market. Intel says see we aren't keeping them out of the largest PC/Server maker's machines. True, but they did keep them out of Dell's machines while AMD had the best thing on the planet.

That's kinda like the Intel car in Nascar rolling out the spike strip on the track every time they have to pit. They fall behind so they work to take out everyone else till they can catch up. It is no longer who is the best at it. It about how much control Intel has over the market. AMD only has as much market as Intel wants them to have. That is when you know that Intel has reached a point of intervention.

The Intel View:
A bully keeps a kid from using the bathrooms at school, the kid still manages to complete highschool. The rest of the kids benefit because there is one less person in line for the bathrooms and the kid still gets a diploma, and the bully always gets to use the bathroom first. Everyone benefits.

The AMD View:
A bully keeps a kid from using the bathrooms at school, the kid still manages to complete highschool. However the kid's GPA is significantly lower so he can't get in an Ivy League School, and therefore doesn't get the fancy job with a view. He has to settle for the high competition jobs with the rest of the schulbs, and is always in danger of being replaced. Later in life he learns that holding it in during school has caused colon cancer and incontinent bladder syndrom. The bully is to blame because he had NO right to keep him from using the bathroom at school just because he was bigger. The bully is responsible.

How will the judge (or jury, if it is a jury trial) see it?


RE: It's about time.
By Oregonian2 on 8/1/2007 3:09:17 PM , Rating: 2
quote:
How will the judge (or jury, if it is a jury trial) see it?


School's fault for not having two bathrooms such that the Bully could only be guarding one of them.

Note: must be a school with only two students else the bullied could have joined with other victims and jointly attacked the bully. Also I doubt the bullied could have been top notch university material else (s)he'd found a bush to use -- particularly available if there were only one other student (the bully) in which case even the bush would be optional.


RE: It's about time.
By nitrous9200 on 7/27/2007 2:37:38 PM , Rating: 4
AMD is a big American company too!


RE: It's about time.
By afkrotch on 7/27/2007 10:51:37 PM , Rating: 3
But not as big as Intel. You'll notice that the EU is trying to milk the large American companies. Like Intel or Microsoft, yet don't hit the smaller ones like AMD or Apple.

I wouldn't be surprised if AMD does the exact same thing as Intel and we know Apple does the exact same thing as Microsoft. Their OS is bundled with a browser and media player, yet they aren't sued for billions.

It's standard business practice, with what Intel is doing. If you sell A product, we don't want you to sell B product. You'll notice that large restaurant chains sell Coke, but never Pepsi. It's been like that for years, yet we don't see Coke being sued.


RE: It's about time.
By JoeBanana on 7/28/2007 3:17:54 AM , Rating: 2
EU hits small companies too. Like spanish telecom company Telefonica. And also they sue in EU as u can see. The fact is that in media you will only hear big news and big is american.

I have no problem with investigation as long as it is objective after all fair play is what brings prices down. But if it's not objective it's bad for competition.


RE: It's about time.
By masher2 (blog) on 7/28/2007 11:11:39 AM , Rating: 5
> "EU hits small companies too. Like spanish telecom company Telefonica..."

Err, Telefonica isn't a small company. Its a massive global conglomerate and the second largest telecommunications company in the world. And you know who its biggest shareholder is? JP Morgan Chase-- a US-based company.