Japan, Europe Investigate Intel Policies

UPDATED The European Union Commission is coordinating its investigation of Intel for alleged antitrust violations with Japan's Fair Trade Commission (JFTC).

The Japanese inquiry stems from Intel's policy of offering rebates to PC manufacturers that agree to limit the use of their own microprocessors in exchange for rebates. EU spokesperson Jonathan Todd said that the Commission was undertaking a similar investigation of Intel's business practices.

Specifically, the JFTC found that one OEM was coerced into agreeing to purchase all of its CPUs from Intel, while another was mandated with an Intel-imposed quota of 10 percent non-Intel purchases.

Other findings concluded that Intel began to use its "Intel Inside" program and market development funds to limit computers to exclusively carry its processors after rival Advanced Micro Devices (AMD) began to grow its market share in 2000 to 2002. Transmeta was also said to be a target of Intel's.

"The JFTC found that Intel illegally manipulated the market to exclude competition, hurting PC users around the world," AMD Executive Vice President legal affairs and chief administrative officer Thomas M. McCoy said in response to the JFTC report.

"Using market power illegally to limit innovation and, more importantly, consumers' freedom to choose, cannot be tolerated. The evidence of harm to consumers is obvious."

In response, the JFTC has imposed restrictions on Intel. Intel must now "educate" its employees to discontinue the practice of issuing rebates and other incentive to its customers based upon exclusivity agreements, but was not fined.

Intel said it has ten days to respond to JFTC's recommendation. "Intel continues to believe its business practices are both fair and lawful. The company is evaluating the assertions and the Recommendation before deciding next steps," the company said in a statement. "At the same time, Intel has expressed concern that the JFTC's recommendation does not appear to take into account antitrust principles commonly accepted worldwide."

Meanwhile, the EU investigation is ongoing. As a consequence of the investigation, Ireland withdrew its offer of 170 million euro in promised aid to Intel to build a new manufacturing facility.