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Investigators crack down on illegal tactics against AMD

South Korean antitrust investigators fined Intel Corp. 26 billion won ($25 million), for illegal rebates and parts discounts to manufacturers on condition that they not buy from rival manufacturer AMD.

The fine, which closely mirrors the outcome of a similar antitrust investigation in Japan in 2005, makes Intel the second major global technology company to be disciplined by South Korea’s Fair Trade Commission, after Microsoft in December 2005.

Intel said it was displeased with the outcome of the order, and is considering appeal.

“We're disappointed and we completely disagree with the findings,” said Intel’s senior VP and general counsel Bruce Sewell.

South Korean officials hit Intel with antitrust charges last year, working from findings of a two-year investigation wrapped up last September.

Forbes called the rebates a “time-honored practice in the personal computer industry;” identical practices in Europe, the United States, and Japan have since landed the company in considerable hot water. Both European and American investigations are still pending.

In Europe, rumors of a “provisional decision” at the end of last month proved to be false, after European Commission officials dismissed a report that it had gathered sufficient evidence to enter a ruling. Despite that, the Commission promised an antitrust ruling against Intel “as soon as possible,” but refused to provide a specific timeline.

If antitrust rulings against Microsoft are any indication, Korea’s ruling against Intel will be a pittance against the kind of money that European investigators might fine. Antitrust investigations against Microsoft hit the company with a whopping $1.4 billion fine last February – compared to $32 million in South Korea – and EU antitrust rules allow for fines of up to 10 percent of annual sales.

Intel will wait for the dust to settle before it acts, it said, as the official outcome could take between 30 and 60 days and may change significantly during that time. The company can also opt to request reconsideration from the KFTC, or choose to seek a court ruling.

Regardless, Intel denied any wrongdoing with respect to its rebate practices.

“To ask us to cease and desist behavior which we are not doing and never have done is odd,” said Intel representative Nick Jacobs. “We don't use rebates in an anticompetitive fashion.”

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RE: How will this affect AMD?
By the goat on 6/6/2008 8:16:45 AM , Rating: 3
Will AMD see of this money? They sure could use it, because Intel is delivering a beat-down on performance and AMD needs all the R&D money it can muster.

Why would AMD get any money from this? This has nothing to with AMD. The ruling says Intel hurt the market, and by extension the consumers in that market, by using unfair business practices. The money goes to the consumers. The government will spend the money in the consumers' best interest (or so they say).

Also there are many more CPU manufacturers then Intel and AMD.

RE: How will this affect AMD?
By Viditor on 6/6/2008 12:07:35 PM , Rating: 2
The ruling says Intel hurt the market, and by extension the consumers in that market, by using unfair business practices

For AMD to get money, they would have to sue Intel (as they are in the US).
I don't know Korean law, but they may still have the option to do so there.
The other place this is important is in the EU where Intel is facing similar charges but for a far greater possible fine.
According to EU law, they could fine Intel as much as 10% of their gross revenue in the EU (several $Billions) for the period under question (I believe it was a 5 year period).
However, AMD would get none of that either unless they file their own lawsuit for damages.

RE: How will this affect AMD?
By just4U on 6/6/2008 12:42:21 PM , Rating: 2
So ... Let's say the EU won and got the max allowance to boot.. where would that money go?

RE: How will this affect AMD?
By Viditor on 6/6/2008 1:40:26 PM , Rating: 2
The money would go to the EU as recompense.
The theory behind anti-trust (in most all countries) is that by commiting these acts, a company or trust is performing acts that are costing the public money because the pricing or choices are no longer being controlled in a free and fair market.

In that case, the fines return to the people in the form of the government as compensation for that violation.

That's not to say that the company that was harmed can't sue for damages (or triple damges in the case of the US) in addition to the fines...they can and usually do!

RE: How will this affect AMD?
By just4U on 6/6/2008 1:47:22 PM , Rating: 2
oh ok, now I understand. I had always thought that some of that money would be dispersed to the wronged companies. But basically they just get a smoking gun with most likely a guaranteed win in a lawsuit. So it still sort of works out.

RE: How will this affect AMD?
By JonnyDough on 6/8/2008 6:39:12 AM , Rating: 2
Well, then if Intel did wrong I hope companies line up to sue. We need to start holding mega corps responsible for crap like this. Free trade? My buttocks.

"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home
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