EU Slaps Intel With Formal Antitrust Charges

castrox writes "Intel is now facing a prolonged legal battle in the European Union for engaging in anti-competitive practices. The courts allege that Intel made at least one arrangement in Germany to ensure that PC manufacturers could only use their products. From the article: 'The investigation in Europe has been going on for a long time. Intel's European offices were raided by EU investigators in 2005. Last year, AMD filed a formal complaint with the Bundeskartellamt, the German Federal Cartel Office, accusing a German and Intel of entering into an agreement under which the German retailer would only sell Intel PCs in exchange for undisclosed payments from Intel. The EC quickly took over that investigation from the Bundeskartellamt.'"

Comments

Punishments.

[ushering05401]

The punishments for such infractions are obviously not high enough. It's not like Intel execs sat down and said "Hey, let's potentially bankrupt our company so we can make a couple extra percentage points."

It is more likely they looked at previous (MS) antitrust settlements and decided that an anti-competitive strategy was an attractive move for execs and shareholders alike.

Regards.

Re:Punishments.

[Handbrewer]

The worst thing is, you're probably right. The really make it hurt for these multibillion dollar companies, you need to strike with either excessive fines, or - demand responsibility from the management, and ship them to jail. You cant enjoy the money you gained unrightfully if you're in prison. But, this is the whitest of white collar crimes. But the bloke on the street who cheats for 500 euro in taxes, gets punished very hard in comparison.

what is fundamentally wrong about it?

[nwanua]

Would someone please enlighten me? Is there something legally or morally wrong with two independent companies agreeing to what seems to amount to a partnership? The retailer obviously benefits from the agreement, otherwise they wouldn't have signed up; so does Intel. The argument is that Intel paid kickbacks of sorts, but what if these had simply been in the form of discounted CPUs?

Back in the day, there were stores that would sell only Apple equipment and related peripherals. I don't know if they signed any exclusive deals, but I don't recall any noise about that. Yes Intel is huge, making it vunerable to charges of monopolistic tendencies, but what is it about this case that makes it fundamentally different from any sort of exclusive agreements?

Consider: I might want to sell only cheese from a certain company, and discounts (kickbacks if you like) might make that choice even sweeter. What's wrong with that? Why do I have to sell anybody else's cheese? And why do the cheese manufacturer and I have to be punished?

Re:what is fundamentally wrong about it?

[tomstdenis]

Nothing, if you're not a monopoly. Monopolies are also not illegal. Abusing them to squeeze out legitimate competition is though.

Intel abused their position to bully/pay off companies to not sell AMD gear, not because the AMD gear was inferior, or less desirable. That's counter what a free market should look like and is bad for everyone. It lets Intel slack off [re: Pentium 4] and sell things for ridiculous prices [re: Pentium 4].

Nowadays though things seem to be better, Intel has better tech than before and they're selling them at fairly competitive prices. But that doesn't excuse their behaviour earlier. Who knows where AMD would be today if they had more funding for research from sales that were denied them?

Tom

Re:what is fundamentally wrong about it?

[Zero Degrez]

Part of having a free market is that the CONSUMER is the one that gets to make the choice. That is, per your example, Apple were extremely popular amongst the consumers, then stores would stock more apple equipment to meet the demand made by the consumers. However, if per your example, Apple offers kickbacks to the store to only stock their equipment so that consumers are forced to purchase the Apple brand, then it is no longer a free market where the consumer makes the decision on what products will succeed. This is BAD. And yes, there is something legally wrong with two independent companies agreeing to divide up a geographic area to only allow a certain product to be purchased there. The difference between this and a partnership though from my point of view, is simply scale. It's a thin line to walk, but when a single store or a few stores control nearly all of a particular market of items, then those stores might be breaking the anti-trust laws that have been put in place if they agree with another company to only allow product X to be sold in their stores.

And while for whatever reason you may think this is good in the short term, it extinguishes new competition from rising to the surface to compete on an even playing field. Thus leading to the end or at the very least, the slowing with which new ideas, new products, new widgets make it to the market for you to buy.

All anti-trust laws are in place to keep YOU safe, so that YOU get to decide if you want to buy Intel or AMD...or Sun.

Re:what is fundamentally wrong about it?

[Zero Degrez]

Because they aren't the same. A franchise Apple store says, "Hi, I'm a Mac...err Apple store." These stores have, and will always be dedicated to selling one brand. However, when you take a general store and make a secret agreement to only stock Apple gear. Then it's a Mac of a different color. Because now customers don't know it's actually an Apple store, and now these poor customers are being forced to buy Apple's because that's all they see.

You may say, "but why don't they just go online and buy something else", well that's all well and good...but most people don't do that. They go into their favorite retail stores, like, best buy, look around, find something they like and buy it. Especially when it's a component like Intel, you think people care if they get an Intel or AMD? No, they just want it to work and be cheap. But, if that store only sells computers with Intel chips, then AMD gets squeezed out of the market, even if their product is superior.

Re:US Companies

[Anonymous Coward]

"Does it do this for European-based companies as well?"

YES, for god sake. It is not our fault that some of you don't know what happens arround the world.

* European companies are getting fined when doing anti competiveve practices
* European companies are getting investiged about monopolistic practices (recent I hear more and more about the telecom sector)
* European companies are getting fined when they are forming a cartel
* European companies must follow the same rules as foreign companies between "our" borders
* Etc

It's not one big European conspiracy against the good "old USA". Some of you people are really stuck in the "they are all against us" mantra aren't you ?

Re:We all know litigation...

[KarmaMB84]

If Intel paid someone not to sell a competitor's product, it's not about competition.