RSSEC Charges Intel with Abuse of Dominant Power
By Scott M. Fulton, III | Published July 27, 2007, 10:54 AM
This morning in Brussels, spokespersons for the European Commission confirmed that Intel was served yesterday with a formal Statement of Objections, charging the CPU manufacturer with paying for exclusivity with cash, incentives, and discounts in order to compel OEMs not to purchase AMD CPUs.
At present, the EC has not made public the names of OEMs with whom Intel allegedly made deals. However, according to spokespersons, the Statement does specifically name AMD as the sole party which Intel allegedly sought to harm.
In a public statement, the EC listed the three counts delivered to Intel:
1) Intel is said to have given or offered rebates to European OEMs in exchange for agreeing to purchase most or all of their CPUs from Intel.
2) Intel allegedly made payments to one OEM - not publicly named yet - for either delaying or canceling an AMD-based product rollout. (It isn't clear why the EC is uncertain whether the OEM delayed or canceled the product; theoretically, if it never debuted, it was probably canceled.)
3) In placing bids with selected customers, Intel is said to have offered CPUs in quantity at below cost.
Specifically, phrased in a more American fashion, Intel is being formally charged with three counts of violating Article 82 of the EC Treaty, which includes binding law that applies to member states. Since that part of the Treaty is brief and simply put, we excerpt it here in its entirety:
Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
The European Union operates under a parliamentary system, in which the European Commission is the "upper house" - a counterpart to the US Senate. In a fashion similar to how a senator may chair a committee devoted to a particular branch of lawmaking, commissioners are appointed certain legislative departments, one of which is literally entitled "Competitiveness."
“We expect to demonstrate to the Commission that rebates and other forms of discounting are not illegal, and they had nothing to do with AMD's performance in the market as a company.” Chuck Mulloy, Intel corporate spokesperson |
In Intel's case, it will have ten weeks to respond to the Statement of Objections, either in writing or in a formal, public hearing. But after that time, the EC may still decide to impose penalties. Though the EC has not stated this time the possible range of those penalties, if history is any guide, it may have the right under EU law to fine Intel as much as 10% of its worldwide profits.
How much would that be? Ten days ago, Intel reported its second quarter financial numbers. Its net income for the past three months was $1.3 billion, a 44% gain over the second fiscal quarter of 2006, on revenue only slightly up annually to $8.7 billion. Those are extremely healthy numbers, and the big profit gain measured against a slight revenue gain shows that structurally, Intel may be out of the woods. But think about $130 million per quarter as a possible fine. That's more than the company's recent restructuring costs on a quarterly basis.
How would the EC impose that fine? That seems to depend upon the attitude of the commissioners at the time. Technically, it should apply to the entire period of time in which the market was impacted by Intel's alleged abusive conduct. But if the EC determines that conduct is ongoing - as it has claimed in the case of Microsoft - its fine could resemble a quarterly toll booth. Did you make $1.3 billion? Hand over $130 million. (Do not pass Go.)
When would that fine take place? This is the start of yet another long, legal slog - maybe longer than the AMD v. Intel battle going on now in US courts. The EC delivered its famous Statement of Objections to Microsoft just before Christmas 2005, and while it has threatened Microsoft with new fines calculated on a daily basis, on top of old fines in the hundreds of millions of euro, the legal wrangling there still continues.
Next: Intel responds to BetaNews, and AMD jumps in
Look, Intel got to the top by using marketing techniques and being there earlier.
AMD just needs to pack it in; Intel's marketing techniques sound completely legal to me, and are done by many other companies.
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|"...spokespersons for the European Commission confirmed that Intel was served..."
There you have it. Intel was served :P
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|You know what? Survival of the fittest. But still, F*CK Intel. Hope to see AMD make a devastatingly BRUTAL surprise comeback in the microprocessor arena that puts a massive dildo up Intels monopolizing, competition-stifling butt hole.
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|Sounds like you might have an anger management problem there.
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|Nice use of formatting, Scott
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|I think this is a moot point. The EU is done for anyway - with a negative birthrate (meaning more people are dying than being born) - unless it changes soon, there won't be an EU anyway.
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|Hello Mr Bush.
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|Must EVERYTHING be a !@#$ing political debate?
Live a little, and for heaven's sake quit listening to every blog/news editor you hear.
Bush has no authority other than specific excecutive powers that are not approved or proposed by the other branches of government. He CAN'T write law, change law, or even propose law. That's the Senate/House people speaking to him and he presents their plan to us. He's a spokesman more than a policy maker.
Nevermind--I forgot that government classes post 9/11 don't always teach real government anymore.
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|"I think this is a moot point. The EU is done for anyway"
That's funny, because the last time I checked the Euro was considerably stronger than the American dollar. Soon the American dollar will be weaker than the Canadian dollar. Seems to me like it's the American dollar and economy that's going down the drain, not the EU. Also, look out! There's a terrorist behind you! hahaha
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|Well said. The sheep get old.
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|Soon being how long? 500 years?
Of course, nothing ever changes - now the birthrate is falling it can't ever reverse.
(sarcasm)
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|What are you trying to demostrate? in the EU is the same count of attacks by terrorists than in the USA. This have something to be with very very dirty politics than technology comments posted here.
The Euro is getting bigger than the dolar, this is a fact. Something is going to do USA to stop this soon, the one´s that will need to be at watch sould be the EU citizens :P
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|Actually, the Executive branch *does* have the power to propose laws to Congress during his State of the Union and other addresses to Congress. Proposing is not the same as signing laws into existence.
Any citizen can *PROPOSE* a law to Congress, although it's usually never done because people are supposed to go through their representative/senator.
The Executive branch *can* veto a law or even let it die in special circumstances if not signed within 10 days of passing and being given to the President, but Congress adjourns during that period, which is de-facto lawmaking in reverse(or in this case, law "revocation" by the President).
The Executive branch also is in charge of FORIEGN POLICY, so yes, they DO make policies and lest we forget about Executive Orders, which are just as binding as a law to any federal agency, especially if it's within the scope of powers given to the President by the Constitution or Congress.
Some of you need to go back to school. The President has a LOT of power.
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|I'm British and even I know that you're wrong.
Executive orders: http://tinyurl.com/2blww4
Signing statements: http://tinyurl.com/28f7hl
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|Don't listen to what your pastor tells you, dumba**. The EU is in a much better financial state than the US.
Noticed how the US dollar is about to become less valuable than the Canadian dollar? Be embarrassed. No more "lol one US dollar is 300 Canadian dollar" jokes for you, cretin.
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|Considering world population is too high, (albeit in China, Africa, and India,) why is this a bad thing?
If the world was held steady at 1 billion instead of 6+, wouldn't that theoretically mean better quality of living for everyone?
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|What he tries to say is simple... In the US the state is trying to scare people off with terorism continously. This is not the case in Europe. The leaders here do not link every problem that Europe is going through with terorism.
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|As Commander in Cheif, yes, he is in charge of foreign policy. Yes, he's the one who ultimately lead America to go to war in Iraq. Yes, that's a big power.
However, there are no proposals that are given directly to the House/Senate until someone in the House or Senate actually proposes it. Yes, Bush can ask Lamar Smith to propose a bill, but ultimately, Bush cannot propose it--Lamar would have to (or another member of the House).
My point is that Bush could do little if anything if he were alone--there are still people in the House/Senate that support him, because without any support, he couldn't do anything. No, Lamar isn't the only one, just an example.
State of the Union? Hmm...yes, I suppose he can propose things there. I'll give you that one--I seem to forget about all those 'exceptions' to general rules. Too many of em to count (although the state of the union was a stupid one for me to overlook, sorry). Anyway, Has Bush ever proposed something that he couldn't get ANY backing for? Hardley. He's never alone with his policies is all I'm saying.
Yes, the power of veto can be strong, but it still can be overriden by 2/3rd majority. Apparently, 1/3rd of the Senate still sides with him in most cases. That's at least 33 Senators, in case anyone wasn't counting. Without 33 Senators--Bush'd be powerless.
"Some of you need to go back to school. The President has a LOT of power."
All I'm saying is that in and of itself, holding the office of President is not as strong as one would think compared to, say, the Prime Minister in Britian, the Emporer in China, etc.
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|No reason for me to even look at those links. I'll read it at .gov sites when I'm confused, not some third party.
When in doubt, check closest to the source, not a rephrase of a rephrase of an opinion of a rephrase of the source. The url's you provided certainly aren't government websites is all I'm saying.
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|Western Europe has a negative birthrate but Eastern Europe does not. Since Eastern Europe is now a part of the EU, the EU is not literally dying off yet. Additionally, the EU countries import a lot of labor from nearby 3rd world countries much like the US does from Mexico. The EU immigrants tend to be Muslim though and are steeped in an anti-Western terrorist tradition thus the immigrant issue is big in both the EU and US (and for similar reasons).
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|"What are you trying to demonstrate? in the EU is the same count of attacks by terrorists than in the USA. This have something to be with very very dirty politics"
The dirty politics is the corrupt and mediaeval state of affairs not in Europe or the US but the Middle Ages in the Middle East. The Kingdom of Saudi Arabia is a poster child for such Dark Ages corruption.
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|"We expect to demonstrate to the Commission that rebates and other forms of discounting are not illegal, and they had nothing to do with AMD's performance in the market as a company."
Based on the EU's track record with Microsoft, all I can say to Intel is: good luck with that!
To be honest I'm not entirely sure if Intel is behaving illegally or not, but I have heard many rumors that they have gone to incredible lengths at some points in the past to prevent AMD from having their chips in OEM's PCs. Whether those rumors are true or not I cannot say for sure, but Intel has been very "suspicious" in the past, and the destroying of all those documents recently is more than enough to warrant an investigation at least.
If Intel's innocent, I hope they win, but welcome them to the wondeful world of being too good, Intel. Microsoft will no longer alone...
...Otherwise, Intel did something far more harmful to consumers than anything Microsoft has done, IMHO anyway.
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|Well yeah...We all knew Intel was doing it. It was only a little obvious...
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|But it fell on deaf ears ... For years its been know Intel have been doing it. Even when AMD was producing better 486's than Intel, producing faster and cooler chips. Recently even when AMD was whooping them performance wise intel still had a strong base, company s tied to them with back room deals. Still ... The EU is here to settle the score, and take our cut. And it helps AMD ... perfect.
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|All monopolies need to be broken down. Being in Saskatchewan, land of monopolies, I get to see the joyous benefits of industry with an assured audience daily. Great for the shareholders and politicians campaign coffers for sure but its too bad the middle class don't have enough income left over or the connections to join in on any of that fun.
Same thing with the PC. When the dust settles and there's 1.1 choices to be had, who do you think is going to not be able to afford the ever changing tech to keep up? Or for that matter, why would it ever even need to change. Like Microsoft did with VISTA, Intel could one day just tell us "This is good enough for you. Now eat up."
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