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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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RE: More European = Communist Comments
By Proteusza on 3/12/2008 12:55:18 PM , Rating: 4
Sigh......

Before I start, are you aware that Intel is being prosecuted by the US Department of Justice? For breaking laws? Like, anti competitive laws? you are aware of that right?

Okay, so the EU isnt the only party concerned about Intel. Even in the US, some of the actions alleged to have been committed by Intel would definitely be illegal. So, the EU is not the only entity investigating Intel.

Do you know what Intel did exactly, or why its illegal? Intel paid manufacturers to not stock AMD products at all. Not paid them to sell Intel, oh no, paid them to not sell AMD. Consumers didnt have a choice.

Say Person A heard about AMD on the Internet. He wanted to try one, so he went to Dell. And he said to Dell, "Do you got one of them AMD's?" Dell says no, because Intel paid us not to. "Okay", says Person A. He goes to HP. Same story - wont stock'em because Intel wont allow them to.

Do you see the problem there? Even if a consumer was informed and wanted to exercise their right to choose a product, Intel was unlawfully preventing them from doing so. It has nothing to do with who has the fastest CPU, or the best marketed CPU - had AMD produced nothing but useless CPUs for the pats 10 years, Intel still behaved illegally.

Yes, Intel has the better CPU now - how does that change things? They still broke the law in the past. If I murder someone but then become a good boy again, is that okay? Or should I serve penance for my crimes? The answer, so just about every court in the world believes, is yes - just because you dont commit the crime right now doesnt mean you cant be prosecuted for it.

I didnt call all Americans ignorant - that in itself would be ignorant. I called people who are American and think the EU is full of commie bastards who tax good old American corporations for profit, ignorant Americans.


RE: More European = Communist Comments
By pauluskc on 3/12/2008 1:04:01 PM , Rating: 2
Intel was? Sounds like Dell and HP were the ones preventing the consumer from choice.

I do see the problem with Intel telling them you can't stock the competitor. But Dell & HP voided their innocence the moment they said "OK".

I think that it's unfair that Intel is the only one to be punished. Dell & HP could have said no to Intel and if Intel shorted them supplies, guess AMD gets a little bit more exposure and sales etc.

I think that if those commie bastards should take Intel to court, Dell, HP, and any lowly retailer that took Intel's money should be next on the chopping block. Or is that OK for them to take the money?


By Proteusza on 3/12/2008 1:07:04 PM , Rating: 2
You have a valid point about Dell and HP, in that they share the blame.

I dont know why both the US DoJ and the EC have temporarily forgotten about Dell and HP in favour of pursuing Intel. Perhaps Dell and HP made deals for immunity? I dont know, but yes, they also committed a crime.


RE: More European = Communist Comments
By xti on 3/13/2008 11:12:36 AM , Rating: 2
it isn't that black and white as you make it out to be.


RE: More European = Communist Comments
By Hawkido on 3/13/2008 12:53:38 PM , Rating: 2
quote:
Intel was? Sounds like Dell and HP were the ones preventing the consumer from choice.


Very Clever you!

No, But really, The way the "Crime" was committed was not so overt.

Intel approached a vendor. Intel tells vendor if they sell any (or more than a small%) of AMD products then Intel will cancel their "Discount". See Intel wasn't actually charging vendors more for their products they were simply removing the discount that only the people who sell only Intel get. Which means that another vendor can out price you on a PC if you don't have the discount by $100 on a PC of the exact same specs, because you had to pay more for the Intel Chipset, Network Card, CPU, etc...

The plan worked. Once one vendor fell in the rest had to because AMD wasn't large enough to provide CPUs to all the vendors. And this is the time when AMD HAD THE BETTER CPU. So shut up about Core2Duo already... It wasn't even a wet dream at the time. Intel was still trying to make NutBurst work.

Now as to the fine... I think a percentage should got to the EU for legal costs. The rest should be split up to AMD and other companies who were bold enought to put their name on the complaint before the ruling (Weighted according to Estimated loss of profit)


By michael67 on 3/13/2008 9:28:32 PM , Rating: 1
Actually it doesnt work that way the EU ore/and US will if found guilty fine them for a X amount
Then AMD can go to civil corth and sue Intel for strong arming them out of the marked.
whit a conviction from the EU and/ore US they make a mouths stronger case.

So if convicted Intel got to put a big chunk of money aside to pay for all the legal fees, fine's, and compensation to AMD, ware the fine for Microsoft could look like a a ticked for jay-walking.

If it go's really wrong for Intel, i wouldn't be surprised if it end up between 10 to 25 billion dollars what they can put aside for fines and compensation.

Why do you think Intel CEO Paul Otellini went personally to the hearing, they are shitting there pants after what happened to MS and also they see that the EU takes wrong doing by monopolist mouths more serious the the US dose.
At least in the past.


RE: More European = Communist Comments
By rudolphna on 3/12/2008 1:32:15 PM , Rating: 2
I see what you are saying, and yes i was aware of that. But, really, whose fault is it? Is it intel, for offering that, or the fault of the company (dell for example) that accepts that bribe? While blame would go to both companies, Dell would be more at fault for accepting such a deal. But Intel is still at fault, but such a massive fine is unecessary. A fine yes, but not one of such magnitude. if most europeans didnt hate America and think we are a bunch of fat, lazy rich, polluting maniacs, then maybe you wouldnt have so many americans who think that the EU is out to get the US. No offense, because i like europe btw.


By gmw1082 on 3/13/2008 10:23:28 AM , Rating: 2
Not that I want to let companies like Dell off the hook, but I thought the deal was more like this.

Intel "If you stop selling AMD we will offer our processors at a good price and give you some extra cash on the side."

Company "That doesn't sound legal."

Intel "If you keep selling AMD we'll raise the price you have to pay for our processors. You wouldn't want your competition paying less would you?"

Company "Well I guess you don't leave us much choice but to accept your offer."


RE: More European = Communist Comments
By xti on 3/13/2008 11:13:46 AM , Rating: 2
Just because a Dell of HP say no, does that let intel off the hook.


By z3R0C00L on 3/14/2008 2:19:19 PM , Rating: 2
quote:
Do you know what Intel did exactly, or why its illegal? Intel paid manufacturers to not stock AMD products at all. Not paid them to sell Intel, oh no, paid them to not sell AMD. Consumers didnt have a choice.


Wow, you made that statement like it were true. That's the allegations against Intel, not exactly what transpired. You're innocent until proven guilty.

As for the whole Dell quote about Dell telling customers they were paid not to sell AMD processors that's un-true. Intel offered discounts to companies that sold an x number of Intel based products. The more products the heftier the discount. As such companies made the choice of not selling AMD processors in order to get a heftier discount. Nothing wrong with that as it's how the IT world operates.

The issue at hand is whether AMD could compete with Intel. Well they couldn't compete with Intel due to Intel having had the superior product from their inception. AMD WAS catching up with K7 and then K8... but Intel fought back with Core and Core2.

Whether AMD can compete or not is not Antitrust as the consumer did not suffer in this case (Intel's hefty discounts to OEM's actually pushed the prices of personal computers lower and Intel further pushed the prices lower with the introduction of the Core2 family (yes, AMD was happy selling X2's at over $500 for the base model ripping off customers or don't you remember).

That same $500 CPU (X2 3800+) was brought down to nearly $99 once Core2 launched almost over night. Intel's practices have benefited consumers, not the opposite. They've just been hard on AMD. And Honestly I don't care about AMD or Intel. I'm a consumer.. I care about pricing and performance.


"A politician stumbles over himself... Then they pick it out. They edit it. He runs the clip, and then he makes a funny face, and the whole audience has a Pavlovian response." -- Joe Scarborough on John Stewart over Jim Cramer




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