EC renews its anti-competition objections against Intel

By Scott M. Fulton, III, BetaNews

July 17, 2008, 5:04 PM

This afternoon, the European Commission sent what it's calling a Supplementary Statement of Objections to Intel, reiterating its three-count claim of anti-competitive conduct in the European market against rival AMD.

The latest Statement from the EC, according to the Commission, adds supplemental material to its charges almost exactly one year ago, that Intel violated three counts of Article 82 of the EC Treaty. That law states that no entity that holds a dominant market position may use its influence to alter market conditions in such a way as to negatively impact trade among member states.

There are no new charges in this supplemental statement (SSO), and neither the EC nor Intel have said exactly what the new facts in this case are. Intel spokesperson Chuck Mulloy confirmed his company had received the SSO, though in Intel's view, the general allegations were unchanged.

In short, the allegations were that Intel 1) paid an unnamed European retailer to carry Intel-based products exclusively; 2) paid an unnamed European manufacturer to delay the introduction of an AMD-based product line; and then 3) gave rebates to that same manufacturer for exclusively purchasing Intel components.

In a press statement this afternoon, the EC stated it has now come to the conclusion that those three violations are part of a single anti-competitive strategy, and that revelation was behind its supplementing its July 2007 statement.

"Each of the conducts outlined in the 26 July 2007 Statement of Objections and the SSO is provisionally considered to constitute an abuse of a dominant position in its own right," the EC statement reads. "However, the Commission also considers at this stage of its analysis that all the types of conduct reinforce each other and are part of a single overall anti-competitive strategy aimed at excluding AMD or limiting its access to the market."

Although a supplemental statement is not a typical component of an EC case against a suspected anti-competitive party, it does set forth a process in motion whereby the recipient -- in this case, Intel -- has eight weeks to file a formal written or oral response. After that time, the EC may decide to impose a fine against the company. In the European Parliament, elected legislators have some authority to enforce laws and impose fines; in the US, such authority is typically delegated to judges.

Intel's corporate response this afternoon appears to say that the EC has already decided to side with AMD.

"We're naturally disappointed the Commission has decided to issue a new [Statement of Objections]," Intel's corporate statement reads. "The issuance of a second SO suggests that the Commission supports AMDs position that Intel should be prevented from competing fairly and offering price discounts which have resulted in lower prices for consumers. We will evaluate this newest SO and respond fully, but it's clear that the allegations stem from the same set of complaints that our competitor, AMD, has been making to regulators and courts around the world for more than ten years.

"We are confident that the worldwide microprocessor market is functioning normally and is highly competitive in Europe and elsewhere," Intel continues. "Intel's conduct has always been lawful, pro-competitive and beneficial to consumers. As evidence of the existence of a highly competitive and innovative microprocessor market, consumers have benefited from prices that have gone down significantly, output has increased many times over, and the performance of products, including ours, has improved exponentially."

The EC's renewal of its objections comes just days after Intel's worldwide launch of its Centrino 2 mobile platform, two days after the company's report of record second quarter earnings, and on the very day of AMD's own earnings report, which analysts had anticipated to contain more bad news for that company.

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6:35 pm EDT July 17, 2008 - Later this afternoon, AMD chief administrative officer Tom McCoy issued this statement on behalf of his company: "The European Commission's latest charges, along with intense regulatory scrutiny in America and Asia of Intel's conduct, demonstrates that antitrust regulators worldwide are focused on protecting consumers. Intel has paid a leading retailer to turn away AMD-based computers from leading global computer manufacturers, which can only be regarded as robbing consumers of their fundamental right to choose. No antitrust laws anywhere in the world permit Intel to pay retailers and computer manufacturers to boycott non-Intel products."