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Intel insists its innocence as it responds to antitrust allegations from the European Union

Intel revels in the glory of being the CPU industry leader, at least for the time being.  However, like many industry leaders, they have found themselves the primary target of the crosshairs of criticism.  Further, as with any company that is dominating the market, allegations of antitrust violations become a serious threat to the company worldwide. 

AMD said Intel's anti-competitive practices established a monopoly in the microprocessor market.  AMD then sued Intel in U.S. courts in June of 2005.  The company since mounted a long-standing legal battle that included ads in major newspapers and the a website chastising Intel who it portrays as sinister and monopolistic.

AMD received an ally in the form of the European Union.  In July 2007, it announced that based on evidence collected in a multi year investigation, including materials found in a June 2005 raid of European Intel offices, it was filing charges against Intel for engaging in anticompetitive practices.

Intel's senior vice president and general counsel Bruce Sewell issued a carefully worded statement soon after, firmly insisting his belief that Intel was innocent of wrongdoing in the European market.

The charges were supposed to receive a formal response from Intel by October 8, but the EU showed a bit of mercy, extending Intel's window to respond to January 4.

Last week the European Union granted Intel another small measure of leniency, allowing it to file the response to be filed on Monday January 7, instead of Friday, as dictated by the previous extension.

At last Intel issued a response to the European Union and telling the Union to "bring it on."  Intel's formal written response to the EU states not only its innocence, but also challenges EU regulators to hold a hearing to evaluate claims that it illegally used rebates to seize sales from AMD.

Despite Intel's feisty tone, Washington based antitrust lawyer David Balto, a
former U.S. Federal Trade Commission policy director, stated that Intel faces a nearly impossible challenge in proving its innocence to the EU.  He explains, "Intel is going to have a really significant challenge in the proceedings before the EU.  The EU is much more sensitive to the long-term competition effects by dominant firms and much less ready to accept simple snapshots of a company's conduct."

As per EU regulations Intel may be fined up to 10 percent of its annual sales for antitrust violations.   Microsoft initially tried to argue against the EU when it was hit with similar charges and the end result was a painful $690M USD fine.  Intel has even more to lose as it is constantly price cutting to stay competitive and has smaller profit margins, which force it to engage in yearly layoffs.

Intel is also under investigation in South Korea and Japan following raids in these nations. 


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RE: Backwards
By Christopher1 on 1/8/2008 2:46:04 AM , Rating: 1
Actually, he is half right. There is no such thing as a monopoly in a truly free market, but the problem is that the world economy has been no such thing for an extremely long time.

In a true free economy, the person spending the dollar chooses.... but when government limit choice with taxes, tariffs and other things..... that is when the 'free economy' fails to be free anymore and there is little choice.

Add to that government failing to monitor companies to make sure that they are not engaging in monopolistic practices (threatening to not sell to people unless they buy from them solely, etc.)..... and there is no free economy.


RE: Backwards
By smitty3268 on 1/8/2008 3:21:37 AM , Rating: 4
He's right in the sense that once a monopoly exists, there is no more free market. But a monopoly can be created in a truly free market, even if it isn't easy. You really just need to have a high barrier to entry. In some cases, this is a physical barrier - you don't want to have 50 different companies all with their own electrical system hooked up to your house. Other times, it's merely financial/intellectual - it takes a great deal of money and research in order to create something as complex as a cpu. That's a very different situation from something like selling fruit, which anyone can do.


RE: Backwards
By noirsoft on 1/8/2008 3:36:45 AM , Rating: 5
quote:
monopolistic practices (threatening to not sell to people unless they buy from them solely, etc.).....


You mean the way Apple forces you to buy their software if you buy their hardware, and the complete lack of support for running their software on other people's hardware?


RE: Backwards
By Xavian on 1/8/2008 4:34:06 AM , Rating: 2
But, you can choose to go Apple or someone else if you don't like what they do, i don't think you know what a Monopoly means.

Microsoft however have a few monopolies, you have to play most PC games on Windows, You have to play wma files with Windows Media Player, you have to use office files with the Microsoft Office Suite.

Usually this wouldn't be a problem, but there is no alternative to these products in most cases and that's what a monopoly is.


RE: Backwards
By Fox5 on 1/8/2008 5:16:50 AM , Rating: 2
Being a monopoly alone isn't a problem.
Sure, microsoft has the monopoly on WMA files, but WMA is hardly the only choice (or even the best) for music.

I thought Microsoft's monopoly problems were more relate to bundling and varying pricing and availability to discourage PC makers from using competitors (even among windows software).

Anyhow, as AMD is a somewhat major European corporation, it'd be interesting if some element of protectionism plays into the Intel monopoly case. Germany's bailed AMD out before, maybe the EU may try the same. At the very least, keeping a viable competitor in the cpu market may be seen as serving the EU's long term interests.


RE: Backwards
By Zandros on 1/8/2008 12:25:25 PM , Rating: 2
AMD is no more European than Intel is Malaysian.

Anyway, what happened to the presumption of innocence? I find it absurd Intel having to prove they are innocent.


RE: Backwards
By pauldovi on 1/8/2008 12:48:47 PM , Rating: 3
We are talking about Europe. You are presumed to be guilty. You get your rights from your government....

"The New Europe, reminding you why your ancestors left the old one."


RE: Backwards
By Oregonian2 on 1/8/2008 9:29:35 PM , Rating: 2
Not quite true I think. AMD has 100% of it's high-end processor fab in Germany I think. If they lost that fab due to an earthquake they'd be dead meat. If Intel lost a fab in Malaysia it would not be good, but they'd not be dead meat, they'd just have a sore elbow.

P.S. - Yes, AMD has now multiple fabs in Germany, but I think they're next to one another.


RE: Backwards
By nofranchise on 1/10/2008 10:20:51 AM , Rating: 2
Who said Intel are innocent? If you've seen the evidence discovered by the EU's lawyers, please let us in on it. But to think the European Union would go to court in a case like this withouth hard evidence is a tad more absurd.


RE: Backwards
By Oregonian2 on 1/8/2008 9:31:19 PM , Rating: 2
Good point. McDonald's has a monopoly on "Big Macs", but that doesn't seem to cause a problem. Burger King has a monopoly on "Whoppers" which compete with the other monopoly. :-)


RE: Backwards
By rdeegvainl on 1/8/2008 5:18:50 AM , Rating: 2
So you have to use windows media player, to play windows media? also there are alternatives to the products windows have. They may not be what you want or need but they are there. You have linux, you have open office. Oddly enough, the ones I mentioned are FREE.


RE: Backwards
By Lonyo on 1/8/2008 8:30:12 AM , Rating: 2
Xavian does seem to have no idea what he is saying.
Not only (in hardware terms) is there a wide range of support for wma files in portable players (Creative, Cowon, Philips, Microsoft, iRiver etc etc), but in terms of software on a computer for playing, there are many many many available options (Winamp, Foobar etc etc).
So not only does wma work in different software players, it also works on different hardware, unlike Apple iTunes tracks. Although I am not sure how the new Zune marketplace tracks work.

As for office files, as mentioned, OpenOffice (AFAIK) works with MS Office files, and it's free, and available for Windows and Linux.


RE: Backwards
By Joz on 1/8/2008 6:24:34 PM , Rating: 2
This post made me laugh.

First off, Microsoft no longer creates its own monopoly, it no longer has too, all the programs bring written are written for the majority OS (aka: Windows) if you want to get pissed off at someone for creating a monopoly, well, go yell at anyone who uses Windows.

Secondly, I do belive OpenOffice can handle any Microsoft Office file. And WMA can be played on other programs with a few minutes of googling codec packs.

THERE ARE MANY ALTERNATIVES, you just to much of a moron to find them, and I hope when you do, that your to stupid to use them.


RE: Backwards
By Ringold on 1/8/2008 6:37:19 PM , Rating: 3
quote:
THERE ARE MANY ALTERNATIVES, you just to much of a moron to find them, and I hope when you do, that your to stupid to use them.


Alternatives for the infirm of mind? Doesn't Apple corner that market? :)

(I kid! Sort of..)


RE: Backwards
By BMFPitt on 1/8/2008 10:57:17 AM , Rating: 2
Apple is a monopoly like Dennis Kusinich is a Presidential frontrunner.


RE: Backwards
By ghost101 on 1/8/2008 1:13:19 PM , Rating: 3
Itunes/ipod statistics would disagree.


RE: Backwards
By BMFPitt on 1/8/2008 3:08:24 PM , Rating: 2
There are dozens of available alternatives that are in many cases cheaper and/or better. Only a small fraction of songs stored on iPods are iTunes purchases. There is nothing at all that compels a music player buyer to pick an iPod (unlike, say, Comcast.)


"We basically took a look at this situation and said, this is bullshit." -- Newegg Chief Legal Officer Lee Cheng's take on patent troll Soverain

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