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Intel CEO Paul Otellini arrives at the EC hearing building in Brussels to argue Intel's case.   (Source: REUTERS/Francois Lenoir)
Chipmaker continues to plead its innocence before the EU

The European Commission (EC), the executive arm of the European Union (EU), has already brought one mighty opponent to its knees.  It fined Microsoft almost $2.6B USD overall for antitrust violations, including fines of $690M USD and $1.4B USD.  Microsoft tried to refuse to comply with EC's verdict, but ended up paying for it even more in the end.

Now the EU is pursuing chipmaker Intel for allegedly employing anticompetitive practices such as a price slashing and illegal rebates to drive smaller chipmakers out of business.  The EU issued formal charges against Intel in July.  Intel responded quickly that the charges were nonsense and that AMD was the one complaining, not the customers.  AMD claimed that Intel reaped $60B USD in monopoly profits.

Intel fought back demanding a hearing before the EC where it could argue its viewpoint.  Meanwhile, Intel suffered another loss when its German offices were raided last month by EU agents, who seized documents applicable in the antitrust case.  Germany was one of the countries in which Intel is allegedly to have employed price manipulation and illegal rebates.

Now Intel has finally gotten its way, in effect, as it had a chance to plead its case before an EC hearing.  Intel's chief executive Paul Otellini travelled to Brussels to represent his company at the hearing.  Intel, whose chips are in four out of every five of the world's servers and PCs, has also been accused by the EC of paying off computer manufacturers to pick Intel chips over AMD chips.  Intel has denied these claims saying it competes fiercely and legally.

Mr. Otellini addressed Hearing Officer Karen Williams, arguing that Intel's financial practices were well within the law and that its success was from having a better product, not illegal maneuvers.  Ms. Williams will report to Competition Commissioner Neelie Kroes on the case at the end of the hearing. 

Commissioner Kroes, who recently championed the $1.4B USD fine against Microsoft, will make a final suggestion to the full European Commission about Intel's fate and the amount of a possible fine.  Fines can be up to 10% of a company's global revenue, under EU business law.  Commissioner Kroes previously stated that Intel may be a larger threat to E.U. business then Microsoft.  Following Commissioner Kroes statement, the EC will put the issue to a vote and come to a judgment.

Intel had most of the day yesterday to plead its case.   It discussed proprietary information during the hearing, requiring several participants to have to leave for extended periods.  The U.S. Federal Trade Commission and New York attorney general's office, who are investigating possible Intel antitrust violations within the U.S, were both represented.  It is expected that they may launch similar antitrust campaigns following in the EU's footsteps.

Today several consumer groups will have their chance to speak.  BEUC, a European umbrella group for consumer groups, and individual groups from the Netherlands, Spain and France will all be represented.  The groups so far have not come out with a firm stance on the allegations, but Monique Goyens, BEUC director general assured, "We may do so later."

She further stated that BEUC wants to ensure that consumer issues about pricing and innovation are properly examined and addressed.  AMD and Hewlett Packard are also both going to speak today.  Their accounts and testimony will be critical as their relationships with Intel figures heavily with the charges leveled against the chipmaker.

The EU, in addition to the Intel office raids, raided multiple retailers that sold only Intel chips and not AMD chips.  The materials gathered in these raids cannot be used in the hearing.  However the EC could elect to issue new charges against Intel at any point.  It did so three times during the Microsoft case, so such a result is not unexpected.

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Short memory
By kontorotsui on 3/12/2008 11:42:58 AM , Rating: 3
Have you forgot AMD Athlon motherboards sold in white nameless cases because all the makers were scared by Intel, threatening "component shortages", if they dared to sell boards for the competition?

RE: Short memory
By pauluskc on 3/12/2008 12:28:45 PM , Rating: 5
Why these retailers with these big laws protecting them were so scared doesn't make sense. Sounds like they are just as guilty as Intel at preventing choice for the consumer.

But Intel's the one to get punished.

RE: Short memory
By Topweasel on 3/12/2008 2:21:19 PM , Rating: 3
What he is talking about is the the old Athlon Slot A mobo's. Intel just a month prior to its release said it was about to hit chipset shortages. By making a general announcement that stocks were low Intel thought it would give them the leeway to choose who and how much to ship chipsets to. Behind the scenes they where supposedly threatening manufacturers with limited chipset shipments if they made Slot A boards.

Asus was one of the few big manufacturers to get away with it and even they would only do white boxes and the only reason they did that was the manufactured 50% of Intel boards at the time (not compatible boards but Intel labeled boards as Intel doesn't manufacture any of them.

It would be different if both companies where relatively close to the same size, but AMD couldn't make nearly enough (and still can't) CPU's to go into Asus motherboard which made it nearly impossible for asus to be able to shift over unused Intel production (due to "chip shortages") to AMD based products. Intel knew this and unfairly tried to make it impossible to compete in an attempt to make them the next Centuar\Cyrix. It was worse because they forced AMD in the patent negotiations to not make any CPU's after the K6 that were bus and pin compatible with Intel.

RE: Short memory
By DallasTexas on 3/12/2008 4:29:42 PM , Rating: 2
Have you forgotten that large OEM's are free to choose whatever supplier provides the best solution, price, performance and steady source of supply?

How about your allegations are just that - allegations?

Now that AMD has finally produced something, it seems the AMD bleeding hearts are coming out of the woodwork again.

RE: Short memory
By eye smite on 3/12/2008 7:04:52 PM , Rating: 4
I'm sorry, I have to disagree with you. These business practices from intel were alive and well in the days of the athlonxp and before. They used this same sort of dirty business conduct during the days of the 8086 to undercut and dry up IBM's 8088 market on the original PC's. This practice never became more prevalent than during the days of the athlon64 as AMD was making as good and in most cases a better cpu than intel. As a result, wow just wow, intel had to shift gears and actually compete instead of being so lax and born was the core architecture. Why? Well they couldn't strong arm their way through the market anymore, it was catching too much heat, as was seen today.

RE: Short memory
By afkrotch on 3/12/08, Rating: 0
"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer

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