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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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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.


"If you look at the last five years, if you look at what major innovations have occurred in computing technology, every single one of them came from AMD. Not a single innovation came from Intel." -- AMD CEO Hector Ruiz in 2007














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