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Fine is the largest ever levied for antitrust violations in the EU

Intel is the largest CPU maker in the world and dominates the market in many categories. Allegations were made against Intel in Europe that the company was using its dominant market position to reduce competition and prevent AMD from gaining market share.

DailyTech
has been following the EU investigation into Intel closely. This week allegations against Intel were outlined that claimed the chipmaker offered computer makers discounts and incentives to not use AMD products and to cancel AMD products in development.

The New York Times reports that The European Commission has now ruled against Intel and fined the massive chipmaker $1.45 billion. The fine is the largest ever levied against a company by the Commission and eclipses the fine that Microsoft paid to the EU for anticompetitive practices by about two times.

The EU competition commissioner Neelie Kroes says that the massive fine was justified because Intel has denied consumers a choice for CPUs in products. Kroes told the NYT, "[Intel used] used illegal anticompetitive practices to exclude its only competitor and reduce consumers’ choice — and the whole story is about consumers."

Intel CEO Paul Otellini said the firm would appeal the decision. Otellini said, "We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace. There has been absolutely zero harm to consumers."

AMD's Giuliano Meroni, president of European operations said, "[The decision would] shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers."

Kroes also says that Intel went to great lengths to cover up its anticompetitive actions. Part of the ruling against Intel also forces the company to immediately stop offering computer makers rebates that are part of the reason Intel maintains an 80% market share in Europe.

Intel must change these practices immediately pending appeal though it can ask for an injunction. The $1.45 billion fine has to be paid immediately, but will be placed into an account and held until all of Intel's appeals are exhausted. The appeals process could reportedly last for years.

The amount of the fine levied against Intel is certainly massive, but the NYT says it could have been even larger. The European Commission can levy fines as high as 10% of the company's total revenue. With sales of $37.6 billion in 2008, the fine could have reached nearly $4 billion.

Fines collected by the commission are added to its budget, which is around €130 billion reports the NYT. Kroes said, "Now they [Intel] are the sponsors of the European taxpayers."

The huge fine will also serve as a warning to other companies facing investigation by the commission. Regulators in the EU are some of the strictest enforcers of antitrust law in the world. The NYT reports that the EU is so much tougher on antitrust that U.S. firms often file allegations in Europe rather than in America. Intel is also facing inquiries in the U.S. from the FCC over similar allegations.



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RE: I would laugh...
By Nathanael349 on 5/13/2009 10:53:03 AM , Rating: 0
They don't (or didn't at that point) have winning products. Instead they had a business model that was only good, because they could abuse their large size. Say there was one big car manufacturer that could drive everyone else of the market, because they were big enough. As a result of that bad market we'd all have to drive expensive shitty cars and the economy would suffer. There is a reason why any sane market does not allow monopolies. Go read an economics book ;) .

Now tell me and this: Would you prefer a market where big corporations are able to destroy all entrepreneurship and innovation since they have more cash OR a market where an entrepreneur can create a better product and compete? I know the entrepreneur is my choice and you too have probably heard enough speeches to believe entrepreneurship is the way to go.


RE: I would laugh...
By iFX on 5/13/2009 10:54:04 AM , Rating: 1
Microsoft and IBM, circa 1980 - aka - David and Goliath.

Point, set, match.

Large corporations to not stifle innovation - this is just a lie perpetuated by those who believe that every success a corporation has created for itself actually should belong to some kid in a basement.


RE: I would laugh...
By Nathanael349 on 5/13/2009 11:01:50 AM , Rating: 2
Yes, but Microsoft only succeeded due to anti-trust regulation. If IBM could pay retailers not to sell microsoft's OS they wouldn't exist and innovation would be stifled. ;)

Go back and re-read my post and you'll see I'm not saying that the existence of large corporations stifles innovation. I'm saying market abuse does.

This is the argumentative fallacy you committed:
http://en.wikipedia.org/wiki/Straw-man_argument


RE: I would laugh...
By iFX on 5/13/2009 11:05:37 AM , Rating: 2
You have never seen me state that anti-trust legislation is bad. You made that assumption though, which is the fallacy of your character.

Microsoft's success was perpetrated primarily through their resourcefulness and ability to offer products people wanted to buy - and no huge corporation could stop them.


RE: I would laugh...
By Nathanael349 on 5/13/2009 11:12:18 AM , Rating: 2
I haven't assumed that. You yourself in your first (or second) post claimed that the best market is an unregulated one - anti-trust regulation is regulation no matter how you look at it. You've just shifted your position by a mile right now ;) (debating 101, don't do that :P ).

You do realize that what Intel did flies in the face of anti-trust regulation right?

This is my last reply, exam season ;) .


RE: I would laugh...
By iFX on 5/13/2009 11:16:42 AM , Rating: 2
You have assumed it, foolishly I may add. Now that you have no argument you are baiting on semantics to move focus away your own failure to bolster your misguided and factually incorrect points. My words are there to read and however you may misquote them the original text of course can't be changed.

Of course this is your last post. Flame and run. Typical.


RE: I would laugh...
By omnicronx on 5/13/2009 11:40:04 AM , Rating: 3
quote:
Now that you have no argument you are baiting on semantics to move focus away your own failure to bolster your misguided and factually incorrect points.
Haha, thats exactly what you are doing by going off on this tangent.


RE: I would laugh...
By iFX on 5/13/2009 12:57:27 PM , Rating: 1
Let me get you back on track then since you have ADHD. This is something I stated a few posts up. Just so there is no confusion.

quote:
Microsoft's success was perpetrated primarily through their resourcefulness and ability to offer products people wanted to buy - and no huge corporation could stop them.


RE: I would laugh...
By omnicronx on 5/13/2009 11:10:13 AM , Rating: 2
quote:
Point, set, match.
Microsoft was found guilty of being anti competitive and stifling competition, try again.

Please do not put IBM in the same boat as either. If not for them Intel would be the ONLY CPU maker in the market. IBM single handedly made competition possible by not allowing Intel to be the only CPU maker for their PC's.

You point does not prove anything, there is no rule set in stone that large corporations stifle competition, but that does not mean it does not happen. Intel has admitted to all the charges (rebates, incentives etc, exclusivity deals), they just don't think it is illegal, because it is the 'nature of the cpu industry'. The problem is this is an industry THEY CREATED so this is not a defense at all.


RE: I would laugh...
By iFX on 5/13/2009 11:20:02 AM , Rating: 1
Please don't expect me to seriously consider that argument.

The original point was offered that large companies stifle competition. Microsoft is the perfect example during their early years. Whatever they may or may not be guilty of later in their history is irrelevant to the fact that they did indeed take on IBM and that IBM was unable to stop them.

Try again please, troll.


RE: I would laugh...
By omnicronx on 5/13/2009 11:48:35 AM , Rating: 2
quote:
Microsoft is the perfect example during their early years. Whatever they may or may not be guilty of later in their history is irrelevant to the fact that they did indeed take on IBM and that IBM was unable to stop them.
Thats the most ridiculous claim ever made. Of course it matters what they did later on in history. The MS antitrust case was at the peak of their dominance, are you really trying to imply that this does not count? When a large company stifles competition is irrelevent, the fact remains that MS was charged with anticompetitive activity and was forced to cease and desist. You have absolutely no argument here.

Furthermore take on IBM? They were partners! They made an OS together (OS/2)! HP and PC clones were the reason for the demise of IBM computers. By the early 90's (i.e well before the end of their partner ship) IBM was no longer THE player in the industry. You are kidding yourself if you think otherwise.


RE: I would laugh...
By iFX on 5/13/2009 12:50:35 PM , Rating: 1
Are you stupid? We aren't talking about 90s MS. We are talking about 80s MS, when they were nothing, when IBM was a billion dollar organization and MS was in the red. The point is that despite IBM being huge and at the time controlling the PC market MS was able to thrive and survive anyway. They are the perfect example of why big business does not stifle innovation and that singular big business won't be in control forever, other companies will form and grow and that they all start small, against the odds.

Yes, MS took on IBM. Learn the history - what was portrayed in the film that you are no doubt remembering isn't accurate. Learn why Windows was a success and OS/2 was a failure for IBM.

Why am I talking to you? Pillock.


RE: I would laugh...
By omnicronx on 5/13/2009 2:34:17 PM , Rating: 2
You are seriously full of yourself. IBM and MS were partners! IBM chose to use DOS and eventually windows, how on earth can you say there were in competition, especially in the 80s?

IBM was never in direct competition with MS until the OS/2 joint venture was done with, and guess what, that was in the 90's. By that time Windows was a powerhouse, and IBM's OS/2warp never went anywhere.

Furthermore IBM is not the 'perfect' example. They attempted to close out the industry by not allowing PC clones. If not for that innovation would have been stifled as they would have completely controlled the PC market.

So take your own advice and learn your history.

P.S The original OS/2 was the IBM/MS joint venture until 1990. Once again proving your statements incorrect.


RE: I would laugh...
By iFX on 5/13/2009 3:12:55 PM , Rating: 2
You can't read or don't read.


RE: I would laugh...
By omnicronx on 5/13/2009 3:48:29 PM , Rating: 2
Don't you get it? I'm disproving your entire theory. Your entire David vs Goliath theory cannot be correct as they were essentially partners throughout the 80's.

It was not until Microsoft was already a giant that they parted their ways (i.e they were not the little guy, they already controlled the OS market).

IBM tried to control the market and failed to stop PC clones.

MS tried to control the market and was slapped with court orders and fines for being anticompetitive.

And finally Intel tried to control the market and here we are today.

Every single one of these companies tried to get rid of their competition, and most likely would have resulting in the stifling of innovation. It happened with MS getting lazy in the late 90's, happened with Intel getting lazy in the p3/p4 years and it quite possibly could have happened had IBM got their way and made PC-clones illegal.


RE: I would laugh...
By xti on 5/13/2009 11:08:54 AM , Rating: 2
is it cold there?


RE: I would laugh...
By VaultDweller on 5/13/2009 11:34:35 AM , Rating: 2
Microsoft didn't compete head to head with IBM, and in fact IBM was one of their most important clients.

Microsoft's success wasn't a story of David beating Goliath - they never had an established dominant player that they had to overcome. David didn't beat Goliath, David seized an emerging market long before Goliath ever realized that market existed, let alone had any potential.


RE: I would laugh...
By mars777 on 5/13/2009 3:58:05 PM , Rating: 2
Well said.


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