European Commission: Intel violated antitrust laws

The European Commission has issued a statement of objections to Intel regarding its alleged anti-competitive practices in the European Union. As the Commission states, the statement “outlines the Commission’s preliminary view that Intel has infringed the EC Treaty rules on abuse of a dominant position (Article 82) with the aim of excluding its main rival, AMD, from the x86 Computer Processing Units (CPU) market.”

In the [statement of objections], the Commission outlines its preliminary conclusion that Intel has engaged in three types of abuse of a dominant market position. First, Intel has provided substantial rebates to various Original Equipment Manufacturers (OEMs) conditional on them obtaining all or the great majority of their CPU requirements from Intel. Secondly, in a number of instances, Intel made payments in order to induce an OEM to either delay or cancel the launch of a product line incorporating an AMD-based CPU. Thirdly, in the context of bids against AMD-based products for strategic customers in the server segment of the market, Intel has offered CPUs on average below cost.

These three types of conduct are aimed at excluding AMD, Intel’s main rival, from the market. Each of them is provisionally considered to constitute an abuse of a dominant position in its own right. However, the Commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anti-competitive strategy.

In response to the Commision’s statement of objections, Intel Senior VP and General Counsel Bruce Sewell has issued a statement of his own to say Intel is “confident” that the microprocessor market is “functioning normally.” According to Sewell, Intel has behaved in a lawful and pro-competitive fashion, and the Commission’s case is based on complaints from AMD alone and not customers. He adds that the statement of objections is preliminary and “does not itself amount to a finding that there has been a violation of European Union law.”

Nonetheless, the Wall Street Journal believes the Commission’s move “could embroil Intel in a legal process that is likely to rival the European Union’s decade-long battle with Microsoft Corp. in complexity.” Microsoft has had to pay hundreds of millions of euros in fines so far, and its case with the EU is far from over, so the potential battle Intel faces could be very costly.

Comments closed
    • Aphasia
    • 13 years ago

    On the other hand, if somebody takes over after AMD or buys out their remains, often IP-contracts for products in use get thrown in or are at least renegoiated. And there are powers that has the ability to do things like it, but it would probably take a coalition. There are actually quite a few experienced players out there, although they have stayed out of the marker for good reason.

    Hell, even Apple went over to Intel because they demanded too much from IBM, but IBM has both the expertise and experience for selling good chips, and they have collaborated with AMD on features. Then you have also have SUN and Motorola on their corners.

    As for manufacturers, most of the manufacturing are outsourced to a third-party. Look at graphics, flash and memory chips for instance, there you have UMC, TSMC, SMI, Chartered, Samsung, Fujitsu, Nec… etc.

    • BSFilter
    • 13 years ago

    Quite Frankly why anyone would enter a market that has 4Bil+ setup costs never mind the 20 Years + experinece AMD has is beyond me.

    The final nail in the coffin would be the fact AMD has cross licenseing agreements with Intel for IP such as X86 and SSE n.

    A new entrant to the market would never be allowed by Intel to gain access to such IP .

    NOT GOING to happen -end of discussion.

      • green
      • 13 years ago

      really? entry into x86 is $5bil?
      sounds like nvidia might enter the market around that price…
      ibm could easily afford entry at that price as well

      i’m quite sure intel would more than likely license out their ip to new entrants at what they would consider a fair price
      unless of course they want another lawsuit which may produce an even worse judgement if the amd and eu ones turn out bad for intel
      and even if intel do license out their IP they’ll probably get another lawsuit claiming unfair pricing structure

      either way, any company going in would be in it to win it

    • Mr Bill
    • 13 years ago

    As usual, on the release of the news, Intel’s stock will go up. LOL.

    • NotParker
    • 13 years ago

    Remember cheap dual celerons?

    Remember Intel disabling that feature in future celerons so duallies were really, really expensive???

    And it was for no other reason than greed?

    I hope they get a 10 billion$ fine.

      • SVB
      • 13 years ago

      What I hope is that AMD is successful in their anti-trust suit for $3 Gigabucks with trebled damages. That $9 Gigabucks to AMD and that buys a lot of fabs.

      Actually, this is more of the same. Intel has been found guilty in Japan and Korea and now it looks like their gonna get it in the EU.

      What Intel has traditionally done is have predatory pricing in those areas where AMD competes and high prices where AMD doesn’t compete. At the time of the K7 launch, Intel desktop chips were cheap and server chips were very expensive. When AMD moved into the server market, the prices of Xeons dropped dramatically. Intel’s strategy has very plainly been to minimize AMD’s profits to keep AMD from building new fabs. In general, it has been a very successful strategy. AMD’s strategy has been to compete head to head with Intel across Intel’s entire product line. That would or should keep Intel from using huge profits in an area where AMD doesn’t compete to keep prices artificially low in areas where AMD does compete.

      Intel’s lawyers are being disingenuous. The is nothing illegal about giving rebates as long as Intel does not have a dominant market position and it is not done to hurt the competition. It is not illegal for AMD to offer rebates because they do not have a dominant market position. It is illegal for Intel because they do.

      My own personal opinion is that while anything can happen in a court of law (right OJ?) Intel may ultimately hand AMD what they have worked so hard to prevent.

    • LookngIntheVoid
    • 13 years ago

    Back in the day the only way to get an AMD built machine, was if it was a no name rig. This explains why brand name machines only had Intel chips. But paying a fixed sum to a company to be solo supplier of cpus is not competition.

    • Forge
    • 13 years ago

    Even if you don’t personally care if AMD is around or not, you need to thank AMD for ending the 1000$ mainstream CPU market. Before the K6 lines, Intel was complacent and slow to update products, and charging absurd amounts. After the K6, Intel needed to compete with these cheap new chips, and the Celerons were born and reborn. This also started the slow spiral downward of CPU pricing.

    Everyone owes AMD a thank you for that, if nothing else.

    Also, this lawsuit is about the early K7 days, plus some before and after. Maybe you don’t remember, but it was hard as heck to find a mobo for your new K7. The Asus K7M, probably the very best first gen mobo, was sold only in unbranded white boxes. Asus couldn’t officially acknowledge that they had made the mobo or Intel would pull their chipset shipments. More recently, Supermicro, a long-time Intel ‘partner’ (in the jailhouse sense) started making Opteron motherboards. For the first few months, they would not use the Supermicro name anywhere near the boards, for fear of Intel backlash.

    This lawsuit is far from groundless, and it helps you even if you’re a hardcore Intel fan.

      • Stefan
      • 13 years ago

      y[

      • SPOOFE
      • 13 years ago

      Actually, I think we owe the simple fact that technology inherently gets cheaper over time. That plus the fact that the hardware has outstripped most software.

      I mean, AMD deserves credit, but let’s not canonize ’em or anything.

        • lex-ington
        • 13 years ago

        You can stay anti-AMD about it if you want, but I ask you an honest question . . . where do you think we would be if – in all seriousness – if AMD had died with the first release of the K7?

        Prices may come down in time, but if a product 100% owns the market, they can curb the speed and the price at which it comes down.

          • Peldor
          • 13 years ago

          Living in a world where Intel didn’t go after MHz marketing with a Netburst design and instead just refined the P3 into a Core-type product?

          • SPOOFE
          • 13 years ago

          Anti-AMD? You friggin’ drama queen.

          Where would we be? With a different Intel competitor that can actually turn a profit.

          Cripes.

            • willyolio
            • 13 years ago

            what, like IBM? the other processor giant who… oh wait, found it too hard to stay competitive with Intel on the desktop market?

            VIA? the company that barely moves out tiny, low-performance embedded chips, and can barely hold onto its own chipset business?

            you make it sound like opening a fab is as easy as opening a restaurant. oh, if AMD dies, something will just pop up! it’s ottomatic! oh, what’s this here? pure silicon crystals are just growing in my back yard right now! i think i’ll go out to the corner store and buy myself a fab with my lunch money.

            • SPOOFE
            • 13 years ago

            What, you think these things happen over night? The hypothetical – coined by someone else and only responded to by me – dealt with the idea of AMD going Dodo years and years ago.

            Do you really think that such a hole in such a demanding market segment would lay stagnant for a matter of years?

            But no, it’s better to fap off over our Athlon processors and attribute all that is Good and Proper in the universe to AMD. To suggest that AMD can’t heal leprosy is evil and wicked. Flog the unbelievers!

            • willyolio
            • 13 years ago

            and how are you suggesting that another company “rise up” from nowhere? Intel knows how to keep the competition down. They took out the giant called IBM. they’re slowly trying to kill off AMD, which is still pretty humongous within the computer industry.

            you think Intel’s just going to sit back and watch as another competitor strolls by? they’re able to use their might to muscle off AMD, who takes up 20% of the market, and you think they won’t be able to squash a new company that’ll be at 0.01%?

            AMD keeps Intel in check because there’s no other company big enough to do it. if AMD died, there would have to be somebody with the balls to fork over at least $10 billion worth to buy up AMD’s properties. In fact, i wouldn’t be surprised if Intel was part of the bidding war to drive up the price, or just get their hands on patents so that the other (new) companies can’t use them. so yes, it will have to happen overnight. you give them any more time than that, and Intel will probably have enjoyed years of 90%+ profit margins on their processors. the only way to make a competitor to Intel is to start huge and grow bigger. or are you suggesting that a viable competitor to a giant rolling in cash will just “happen” because it’s “natural?”

            you keep tossing out lines like “nature abhors a vacuum” and stuff like that. guess what? there won’t be one. Intel easily has enough capacity to fill the entire market. AMD doesn’t fill in any kind of special niche- their entire product line competes directly against Intel. you know what else nature abhors? duopolies. they’re quite unstable and require both parties to spend as much energy as either can afford to try to beat the other.

            don’t let your hate for AMD make you think that every pro-AMD post is some kind of zealotry.

            • SPOOFE
            • 13 years ago

            Holy crap. Let’s try to sum up this logic:

            Y’all Sez: “If AMD dies, Intel will raise prices and technology will stagnate!”

            I Sez: “No, that stagnation will open a hole that will allow a competitor come into being.”

            Y’all Sez: “That’s stupid it can’t happen overnight you think a new company will pop out of nowhere how can that happen with Intel as strong as it is etc. etc. etc.”

            Look, your own Doomsday Cult answers your own question: If AMD is the only thing keeping Intel from stagnating the market, that stagnation will eventually create a weak spot, and somebody – or numerous somebodies – will get the funding, grow the balls, and pounce. Actually, there’ll likely be a dozen or so such attempts.

            I mean, for crying out loud, that’s capitalism. That’s human nature. Your own AMD-wank fantasy points out that, without the competition, Intel’s position will weaken. Well, duh, what the hell do you think happens when a company gets weak? Somebody takes advantage of it. It’s called “opportunity”.

            Anyway, this is just to shut down the deluded notion that we should support AMD because of what Evil Meanie Intel would do to punish us poor, hapless consumers if they ever had The Chance. We should gauge and judge AMD on their own delivery, their own actual performance as a company, and not give them extra sway because they’re “the little guy”.

            • pluscard
            • 13 years ago

            If AMD is the only thing keeping Intel from stagnating the market, that stagnation will eventually create a weak spot, and somebody – or numerous somebodies – will get the funding, grow the balls, and pounce…
            ———————————————————————————
            Actually, Intel had many competitors over the years. None of them were ever successful in gaining significant marketshare.

            Today we finally know why.

            • SPOOFE
            • 13 years ago

            Only today? People have known about this for years. Intel got away with it because governments inherently move slower than technology, and are only now beginning to catch up. Which is one of the primary factors that is completely different versus five or ten years ago.

            • green
            • 13 years ago

            well it would at least have to be possible wouldn’t it?
            i mean how the hell did transmeta get started?*
            afaik it was founded around mid 90’s
            so it’s not impossible to get in the market
            it means you must have good planning and execution to survive

            * i’m fully aware that transmeta has generally died off. but the fact remains it’s not impossible to enter the x86 market. it’s the staying in there that’s the tough bit.

            • SPOOFE
            • 13 years ago

            Let’s not forget the primary factor keeping AMD afloat has been government subsidy (the same government that is now partially responsible for an anti-trust claim against their pet company’s prime competitor… no conflict of interest there, eh?).

            • SVB
            • 13 years ago

            Lets also not forget that Intel got large subsidies from Ireland and Israel for building fabs there. Bottom line is that Intel has gotten much more subsidies than AMD.
            Also, it was the Duchy of Saxony that gave AMD money to locate fabs at Dresden and not the EU.

            • green
            • 13 years ago

            since the eu formed it’s been tougher for intel to get further subsidies for the ireland fab(s)
            2005 saw a 100million euro subsidy knocked back as EU saw intel as the dominant player*
            since they are still seen as the dominant player i doubt they’ll see subsidies from the EU for quite a while
            which just means that the EU isn’t an attractive place for intel and they’ll likely build fabs somewhere else
            like say, i don’t know, maybe china:
            §[<http://www.intel.com/pressroom/archive/releases/20070326corp.htm<]§ india would be another suspect in the next decade or so * rightly so really. i mean an extra 100mil would be chump change in intel's bank account anyway.

            • flip-mode
            • 13 years ago

            If there’s someone out there who could do a better job competing with Intel than AMD can then there’s no reason they should be waiting for AMD to exit the market. Your reasoning just doesn’t make a lot of sense to me so far.

            • SPOOFE
            • 13 years ago

            It doesn’t make sense to suggest that AMD’s dissolution from the market would leave a vacuum that would almost certainly be filled?

            • Krogoth
            • 13 years ago

            The reality is if AMD goes under. Intel will practically control the x86 market since they hold most of the important IP. It is hard for a competitor to arise when they have to overcome tons of patent BS.

            Compenition will remerge with a different architech, most likely IBM’s own PowerPC family. The PowerPC already has a foothold in the console market, since every console for the current generation is based off the PowerPC in some shape or form.

            • SPOOFE
            • 13 years ago

            I’m not arguing for the demise of AMD, and only a fool could have interpreted my words as such. I’m stating that the market abhors a vacuum; if AMD had disappeared ’round the time of K7 – the original contention (do try to keep up, Johnny) – it’s a virtual given that some other competitor would have filled the blank. That’s the way the market works.

            If AMD were to go kaput right now, it’d take years, but it would inevitably happen. Again, that’s the way the market works.

            AMD is NOT some defender of freedom and liberty keeping us, the hapless consumer, from the hands of corporate greed.

            • flip-mode
            • 13 years ago

            y[

            • SPOOFE
            • 13 years ago

            y[

            • flip-mode
            • 13 years ago

            Actually my comment was intended to case doubt on your theory that someone would sweep in and fill left by the collapse of AMD as quickly as you have suggested.

            • Krogoth
            • 13 years ago

            When pigs fly I supposed.

            The only realistic player that has a chance at competing against Intel these days in the desktop CPU market is IBM.

            • lex-ington
            • 13 years ago

            You can act like an adult and answer my question or act like a child and call me a drama queen for asking a question . . . . but you still haven’t answered my question.

            And yes, if AMD goes under a void will be created . . but Intel can fill that void with subsidiary companies or by themselves but he void will be filled. Then what? How many of the masses will know or even care if every machine had an “Intel Inside”? As it stands, only the enthusiasts really care, and YOU are the beneficiary.

            AMD is no angel, but the iron fist Intel will rule the processor market with would be like buying a Yugo and having the sales agent make /[

      • Aphasia
      • 13 years ago

      He, when i read the article, that was the first thing i thought of. Good that you posted it, although if you hadnt, i would’ve. I still have my unbranded K7M in service, kindof. Standby is more like it. Even the cardboard box is still in my window sill with some stuff in it though. The word Asus is severaly lacking, but easy to find in the copyright info in the manual.

      Forcing motherboard manufactures to either release their stuff unbranded in defience, or not release it all for fear of ever getting chipsets for the Intel boards(that was still in the majority) is really bad. And if this isnt anti-trust strongarming tactics. Then what is.

    • flip-mode
    • 13 years ago

    It’s about time. With Microsoft vs Netscape no one moved to act until Microsoft had already killed the opponent. It’s to bad it’s taken the world this long, and it’s too bad that this is likely going to be a very drawn-out legal battle. I hope AMD gets some substantial payments from Intel. And I hope
    Barcelona can compete with Penryn.

      • WaltC
      • 13 years ago

      Prior to Microsoft shipping IE 1.x, I’d owned umpteen versions of Navigator/Communicator. In those days, I bought pre-built machines and every single one of them was bundled with a version of Navigator/Communicator. I figure I must’ve owned at least a dozen legitimate Navigator/Communicator licenses for various versions prior to Microsoft shipping IE 1.x. Netscape owned the browser market until Microsoft decided to step in and offer some competition and increase consumer choice of mainstream browsers from 1 to 2. Prior to IE, in the mainstream there was only one browser choice: Netscape. This is the part of the story that is never told.

      Microsoft did not run Netscape our of business. Netscape simply quit and walked away, and decided to lobby Congress instead of compete with Microsoft. Barksdale bailed with a Golden Parachute and took a cushy seat on SUN’s board of directors immediately after as his reward.

      Anybody who wants to can compete with Microsoft, provided they are willing to make the effort and go the distance. If you doubt this then take a look at FireFox, because that is exactly what Mozilla is doing. Netscape could have done the same had the company chosen to compete instead of going to Washington, D.C. looking for government aid.

        • FubbHead
        • 13 years ago

        I don’t think it’s fair to make such a comparison.. Netscape didn’t just quit and leave, how do you compete with a browser that is free and comes already installed with the OS you bought, if you have an organization top support financially?

        Firefox is a free, open-source project, run by a non-profit organization. Is those the terms on which you need to compete? And still they’re only making a dent in market penetration.

        • green
        • 13 years ago

        the thing with IE though was that it was eventually shipped and installed for free in every copy of windows
        which gave pc builders no incentive whatsoever to even try to install an alternate browser
        so exactly how do you compete against a product that’s given away for free?
        i doubt the netscape board was thinking “Let’s also sell it for free. What we lose on individual sales we’ll make up in volume”
        and i doubt many people back then would be ‘donating’ to something like a “Netscape Foundation”
        i’d also imagine it would be hard to get an injunction to stop microsoft selling windows + IE

        so yes it was good that IE was brought on the market as a form of competition
        unfortunately not only was competition killed, it had lead weights tied to its feet and was thrown it in the river

        • SVB
        • 13 years ago

        Your memory is missing a few facts. Microsoft was (is) paranoid and was afraid that Netscape would expand into a rival OS. So what M$ did was to cut off their air supply by bundling IE into Windows for free. Netscape sales dropped to nearly 0 almost overnight. No sales, no profits. Eventually Netscape tried to make money by offering Navigator and Communicator for free and tried to make money off of of advertising using the later Google model. Without a sufficient installed base, it died a slow death ending up somewhere about 4.7. The bundling of software to eliminate perceived competition was the subject of the governments successful anti-trust action against M$.
        Firefox, which I use and which is used by many organizations for enhanced security, uses a different model. Firefox is free because of donations of time and money by individuals and organizations. If it weren’t for these donations, Firefox couldn’t exist.

    • axeman
    • 13 years ago

    So what Intel is saying is not that they deny the accusations, but that it isn’t breaking the law?

    Now, not that AMD is an angel, but this is precisely why I like rooting for the underdogs.

    If I had a Core2Duo sitting on my desk running Vista Ultimate-Cash-Grab version, I would just feel dirty. Even though it would probably kick my rig’s butt six ways from Sunday..

    • lex-ington
    • 13 years ago

    I like the comment “the market /[

      • [+Duracell-]
      • 13 years ago

      Pretty much what I was going to say.

      Even if consumers aren’t complaining, they didn’t really have a choice back then. It was either buy a relatively cheap pre-built computer with an Intel processor or build your own (not as easy to do since the enthusiast market wasn’t nearly as strong as it is now) or pay up more for a computer with AMD/VIA/Cyrix inside.

      • kemche
      • 13 years ago

      I am not sure if I agree. During P4 fiasco, AMD gained market share, they sold all the processors that they made. How is it possible that what Intel was doing was hurting their business?

      KG

        • Inkedsphynx
        • 13 years ago

        It doesn’t matter if it WAS hurting their competition, only that they were TRYING to hurt their competition.

        That’s the same as TRYING to commit murder, but not succeeding. Still breaking laws 🙂

          • axeman
          • 13 years ago

          This a brilliant analogy. Kudos. “no harm, no foul” isn’t exactly a solid defense.

            • Peldor
            • 13 years ago

            If they really tried and still failed then they weren’t a dominant player in the market and anti-trust laws wouldn’t apply to them anyway.

          • Stefan
          • 13 years ago

          Well, this most probably /[

            • SPOOFE
            • 13 years ago

            If they were selling processors as fast as they could make ’em, how would they have magically had a larger processor supply if Intel were “playing fair”?

            • Stefan
            • 13 years ago

            TMargins would have been higher had they not been forced to undercut Intel’s prices so much just to get access to the mass market. You argument would be valid if the had only sold to the DOIY/enthusiast market (which was were they had the strongest support, but that also was mostly due to superior bang/buck).

            • SPOOFE
            • 13 years ago

            So they would have gained more PROFIT, but not necessarily more market share. To gain market share, you actually have to have enough product to serve the market.

            Of course, more profit would (could?) have allowed them better expansion, but now we’re so far into hypotheticals that any wild guessing could be viewed as valid.

          • green
          • 13 years ago

          based on that, intel should be fined for the current price war
          coz that’s seriously hurting amd at the moment

            • SPOOFE
            • 13 years ago

            Well, it’s possible to legally hurt a competitor, through legitimate marketing tactics and by just plain having a superior product. The complaint against Intel involves illegitimate moves.

        • StashTheVampede
        • 13 years ago

        The P4 was a “fiasco” from the performance crown. From the marketing standpoint the P4 was probably the most successful lines of chips in Intel’s history — they sold SO MANY of these chips via OEMs of Dell, HP, Acer, etc.

        In Intel’s OWN admission: they were NOT charging the same to OEMs (larger companies got better deals). Some anti-trust complaints later and Intel goes on RECORD stating they will charge the same to OEMs (around the time of Apple’s switch to x86).

        • melvz90
        • 13 years ago

        exactly…

        nowadays, just because AMD doesn’t seem to be able to keep up with the competition (they’ve been shooting their own foot lately), that its easy to blame the other for cheating…

          • lex-ington
          • 13 years ago

          actually, this law suit started before that . . . . AMD would have had their lawyers studying the route to be taken, then executing the submission to the courts.

          AMD was probably still getting snubbed by OEM’s when all of this started. This law suit is strictly based on what HAPPENED, and will stop Intel from doing this again . . . . which is EXTREMELY beneficial to you – the consumer.

        • lex-ington
        • 13 years ago

        It’s only because of that fiasco they made headway . . . . consumers were beginning to realize that the P4’s were actually costing them more to keep operating. The AMD offerings were bargain priced just to get them sold. You never saw any offerings from HP or Dell or any other OEM with an AMD option in ANY ad. . . .now you see them everywhere.

        AMD’s business also grew because the DIY’ers were also growing. Enthusiasts and people tired of buying a sub-par system from an OEM was going with AMD . . .especially with the nForce2 boards (and soundstorm).

        I think if Intel had actually made a netburst product that could smoke the AMD equivalent, AMD may have been dead now.

        • BobbinThreadbare
        • 13 years ago

        Perhaps they would have gained more marketshare (or made more money off the marketshare they gained) if Intel had not been performing illegal activities.

          • orthogonal
          • 13 years ago

          No, as has been stated before, AMD had their fabs at max capacity and they were selling every chip as fast as they were being fabbed. Regardless of what Intel was doing, AMD was maxed out, even if Intel was playing nicely, there’s nothing AMD could have done to gain MORE marketshare because they were capped out.

            • StashTheVampede
            • 13 years ago

            Chicken and egg, right? If AMD landed large contracts for chips, maybe it would have been easier to land funding for fabs (or been able to IBM/TSMC to aid). It’s a huge vicious cycle that AMD is caught in and it’s clear Intel had an obvious hand in it.

    • Spotpuff
    • 13 years ago

    As Peter Griffon would say: UH OH!

      • Lord.Blue
      • 13 years ago

      and Mr. Burns would say: “Release the hounds!”

      • albundy
      • 13 years ago

      EXXXXCELLLENT!

      • albundy
      • 13 years ago

      EXXXXCELLLENT!

      • firestorm02
      • 13 years ago

      “Duffman can’t breathe! OH NO!”

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