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EU Slaps Intel With Formal Antitrust Charges

Posted by Zonk on from the they-do-ed-it dept.

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.'"

46 of 62 comments (clear)

  1. AMD.. by ilovegeorgebush · · Score: 2, Interesting
    Seems like this is a blessing indisguise for AMD...or not? From TFA:

    AMD can use some good news, as the company has fallen from its glory days in early 2006, when the chip maker had passed 20 percent market share. Strong competition from Intel's Core Duo and newer Xeon lines of CPUs have hit AMD hard, and the company continues to lose money despite rising sales: the company reported a $600 million loss last quarter. AMD has high hopes that its purchase of graphics card maker ATI, combined with upcoming Barcelona CPU technology, will be enough to turn the company around.
    Will this have any affect on Intel's stranglehold on the market though? This whole situation is reminiscent of Microsoft and the EU a few years back. Even that barely stopped them. I doubt this'll do much for AMD...much like it didn't do much for Netscape in the browser wars (MS forced to remove IE as the default browser from new Windows installs).
    --
    ilovegeorgebush
    1. Re:AMD.. by ShamrawkNRoll88 · · Score: 2, Informative

      See, therein lies the issue. The UPCOMING Barcelona CPU technology. Intel is already producing, and is getting ready to move to a 45nm manufacturing process in the first half of next year. Barcelona hasn't even hit shelves.

      And another issue, how much will a Barcelona processor cost when it is released. In my opinion, Intel is fighting tooth and nail to stay on top in this one, including dropping their prices drastically when they release newer processors. And the older processors that are having their prices dropped are more likely to find their way into lower-end and mid-range pre-built consumer systems.

    2. Re:AMD.. by adsl · · Score: 1

      Wasn't it AMD which just a few years ago said it was going to undercut ALL Intel CPUs prices in a price war which Intel could not match? Seems to me that in the last 3 years, or so, AMD met their match in terms of performance and price. Given this I don't think that Intel will have much of a problem proving their case. Meantime the EU should pay attention to the signals coming from AMD that they may go fabless. Then what happens to those AMD factories in Germany? Meantime Intel has an EU factory presence in Countries like Ireland. So perhaps the EU is going after the wrong company re the EU's best long term interests.

  2. Slashdotter's creed: by AP2k · · Score: 1

    In karma we trust!

    1. Re:Slashdotter's creed: by Wiarumas · · Score: 1
      How ironic. I'm using Intel now... in America! And thanks to my Intel Pentium III at 696MHz, I got to this article in blazing speeds!

      But back on topic... how big of a market is Germany compared to the big picture? Even with competing hardware, they shouldn't lose too much considering they probably have a strong grasp on the market there already.

      --
      I will bend like a reed in the wind.
    2. Re:Slashdotter's creed: by BeeRockxs · · Score: 1

      How big of a market Germany is? A pretty big one I'd say, with 82 million people living here.

    3. Re:Slashdotter's creed: by Jedi+Alec · · Score: 1

      Not to mention that if there's 1 country in europe known for its willingness to buy the latest and greatest tech gadgets, it's Germany. From my experience in callcenters I'd say the Germans are on average a lot more tech-savvy than their neighbours...and thus far more inclined to actually keep track of this kind of news and act on it.

      --

      People replying to my sig annoy me. That's why I change it all the time.
    4. Re:Slashdotter's creed: by Spliffster · · Score: 1

      not only this, Germany has a huge purchasing power (the average german has a high salary).

      And, Germany is (and has been for a long time) the high tech nation in europe. Technological decision made in Germany influence large parts of europe, since many companies need to work/trade with German companies.

      Cheers,
      -S

  3. Punishments. by ushering05401 · · Score: 4, Insightful

    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.

    1. Re:Punishments. by Handbrewer · · Score: 4, Insightful

      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.

    2. Re:Punishments. by bigattichouse · · Score: 1

      I don't think we as a society have really figured this one out... I believe Dickens had discussions along these lines in most of his work. Maybe someday there will be a way to balance the ability to make laws with the responsibility to make sure they are actually just.

      --
      meh
    3. Re:Punishments. by ttnb · · Score: 3, Informative
      The punishments for such infractions are obviously not high enough.

      Yes.. if fact maybe the main problem is a lack of conherence and predictability in antitrust presecution and antitrust judgements. See the paper "The Incoherence of Punishment in Antitrust" by S. W. Waller, Chicago-Kent Law Review, Vol. 78, p. 207, 2003.

      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.

      Yes :-(

    4. Re:Punishments. by AusIV · · Score: 1

      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.

      But in the case of Intel vs AMD that only works if they can completely squeeze out the competition. Microsoft was able to lock people into MS products by making users dependent on software on file formats only available on Windows. Once they did that, they could charge as much as they wanted and didn't have to be very innovative because people were stuck with them anyway. Rival companies could come and go, but even if they had a better product they had to overcome vendor lock in.

      It doesn't work the same way for Intel. Unless they can completely bankrupt AMD, they're not going to get to the point where they're able to become complacent. Unless I'm missing something, Intel doesn't have the mechanisms to lock users in to their processors. I'm using a Core 2 Duo now, but in a year I could buy a computer with an AMD processor without even noticing a change.

      Now, I don't know if AMD is in such a miserable state they might actually get wiped out by this, but unless that's the case Intel isn't going to benefit much from this.

    5. Re:Punishments. by alfarom101 · · Score: 1

      Make it hurt for multibillion dollar companies? How? If you give them very large fines, the stock will drop, as all these "investors" will walk away. The execs will come up with a plan to up the stock. Guess what that will be ? Sack some people (give it a nice round number like 10000, always good from a marketing point), and that won't be execs. That will be people in manufacturing, quality, customer support etc so not really good for consumers either... And what about where AMD would be if they had all this R&D that was "denied" them. I think people don't really understand AMD's history. AMD (with the exception of the Athlon) has always produced productsm that at best where "as good". They have hardly ever made a profit, which in the real world would mean they would no longer exist. Have you forgotten that Intel sponsored them at the start so they could be used as a second source for military contracts? Who has the most interest in having a competitor around, that has something like at least 5% of market share? AMD in a cut throught capitalist market is an anomoly and would/should have died a long time ago...

  4. FYI: "Market Development Funds" by asphaltjesus · · Score: 2, Interesting

    Depending on how you do it, it's not illegal. But most of the time there is a mixture of legal and illegal MDF usage pretty much everywhere in the world.

    These kinds of market development funds are used to take valued decision makers on vacations, the usual wine and dine and some more unusual things, some of which are legal in Las Vegas. It's a very cozy relationship. So cozy that any hint of a competitor would **really** disrupt the good times.

    Think about it this way. Either Intel keeping you in wine and roses or the MDF goes to your competitor while you have both Intel and AMD's sales people whining in your office once a quarter with less MDF coming in the door overall and fewer perks overall.

    --
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  5. what is fundamentally wrong about it? by nwanua · · Score: 3, Insightful

    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?

    1. Re:what is fundamentally wrong about it? by tomstdenis · · Score: 4, Insightful

      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

      --
      Someday, I'll have a real sig.
    2. Re:what is fundamentally wrong about it? by ObsessiveMathsFreak · · Score: 4, Interesting

      Capitalism is a force. Used wisely, it can be of great benefit. Left to its own devices, capitalism can trample the very society that supports it. It needs to have limits.

      Left alone, agreements like this can erode the supposed free market in which they exists, leading to monopoly, reduced quality and higher prices. We have anti-trust agreements to protect consumers and producers. You may believe in some pure and unadulterated laissez faire market system, but the fact is that has been proven to be unworkable, no matter how many poor excuses are thrown up.

      --
      May the Maths Be with you!
    3. Re:what is fundamentally wrong about it? by Zero+Degrez · · Score: 2, Insightful

      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.

    4. Re:what is fundamentally wrong about it? by Zero+Degrez · · Score: 2, Insightful

      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.

    5. Re:what is fundamentally wrong about it? by visualight · · Score: 1

      neither company has a monopoly on the carbonated beverage market.

      --
      Samsung took back my unlocked bootloader because Google wants me to rent movies. They're both evil.
    6. Re:what is fundamentally wrong about it? by Ozan · · Score: 1

      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.

      By that logic bribery wouldn't be wrong as it benefits the briber and the bribee.

  6. Re:US Companies by castrox · · Score: 1

    but it seems like the EU picks on US companies a lot
    So which, pray tell, European company is a near monopoly and competes with Intel and AMD?
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    Fight for your digital freedom, join the EFF *now*: http://www.eff.org/support/
  7. Re:US Companies by ushering05401 · · Score: 1

    If the U.S. paid more attention to what their own companies were doing the E.U. would not have to.

    I mean, come on, it's not like we Americans are living in a land of vigilant corporate oversight.

    Not trying to start a fight, but your comment seems to miss the fact that questionable corporate practices are rampant here in America.

    Regards.

  8. Re:US Companies by jmiller84 · · Score: 1

    I was talking about companies in general, not just Intel and AMD, when I made that comment. In terms of companies that compete globally, there are quite a few in Europe.

  9. Re:US Companies by pancompact · · Score: 1

    Google for "siemens corruption". Maybe then you are satisfied. It can also happen to companies playing a big role in germany.

  10. Parent link is fantastic. by ushering05401 · · Score: 1

    It is one of the more interesting links I have seen on the subject of antitrust.

    Thanks for posting it.

    Regards.

  11. Official links by Dekortage · · Score: 3, Informative

    Read 'em yourselves: EU's official statement and Intel's official response.

    --
    $nice = $webHosting + $domainNames + $sslCerts
  12. Intel says its actions actually benefit consumers by thefickler · · Score: 2, Informative

    Intel's senior counsel has responded to the EC's preliminary finding by saying that the Intel's actions in Europe actually benefit consumers. http://tech.blorge.com/Structure:%20/2007/07/27/in tel-were-not-abusing-our-market-position-in-europe / But then, of course, they would say that.

  13. Monopoly: AMD can't even give chips away. by Visaris · · Score: 4, Interesting

    Comments by AMD's Hector Ruiz really struck a cord with me:

    www.cbronline.com

    In the case of HP, he said, AMD could not even give away a million processors for free, due to the fear of the potential of Intel punishing the PC maker.

    If you trust Ruiz, this comment should be all you need to know. If Intel is being such a monopolistic bitch that AMD can't even give away chips to HP, I wonder what other cases are going undocumented. I really hope AMD gets the monetary compensation they deserver, as I promise you that Intel's anti-competitive tactics aren't helping the consumer any.

    --

    I am a viral sig. Please help me spread.
    1. Re:Monopoly: AMD can't even give chips away. by ucla74 · · Score: 1

      I wonder if Ruiz would be willing to repeat that, word for word, in court, under oath. (Hint: Look up "dumping.")

  14. Re:FYI: "Market Development Funds" by Red+Flayer · · Score: 2, Informative

    and some more unusual things, some of which are legal in Las Vegas.
    Hmm. Just so you're aware, you need to leave the Vegas city limits for some of those things to be legal. Or so I've heard.

    Just a friendly bit of advice from someone who wouldn't want any Slashdotters to end up in the klink in Vegas.
    --
    "Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
  15. Re:US Companies by Anonymous Coward · · Score: 4, Insightful

    "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 ?

  16. Typical licensing agreement by HTH+NE1 · · Score: 1

    The courts allege that Intel made at least one arrangement in Germany to ensure that PC manufacturers could only use their products. Well, that's a typical licensing agreement: you only get a license to use their products, not possess them.

    Oh, you meant Intel said the PC manufacturers could only use their products? I read it with implied emphasis on "use" instead of "their".

    So the PC manufacturers can only use their products, not Intel's products? Well, is Intel obligated to sell to anyone who can pay? Or am I confusing not only the emphasis but also the pronoun association?
    --
    Oh, say does that Star-Spangled Banner entwine / The myrtle of Venus with Bacchus's vine?
    1. Re:Typical licensing agreement by IdleTime · · Score: 1

      And that is exactly what is illegal in EU.

      Why? Because it ultimately hurts the people and the people are paramount. In USA , corporations are paramount. People are just a nuisance and should not interfere with corporations ability to reap profits.

      In USA, people fear the government, in EU, the government fear the people.

      --
      If you mod me down, I *will* introduce you to my sister!
    2. Re:Typical licensing agreement by DrScotsman · · Score: 1

      In USA, people fear the government, in mainland EU, the government fear the people.

      Fixed.

      I know there's no such thing as "mainland EU", but as someone living in the UK, I'm not allowing you to complement our country as such. I mean on the current topic, the consumers do seem to be protected more than in the US (BBC Watchdog just humilliates any company who breaks the law), but the fear seems to follow the USA model.

  17. Re:US Companies by mean+pun · · Score: 4, Interesting

    Why does the EU always seem to come down on US-based companies that control a large portion of specific markets?

    Because

    • US media, including /., rarely report on cartels involving no US-based companies: for example, for some reason people in the US don't seem to be well-informed about the beer, paper, banana, gas switchgear, and rubber cartels (from just the first two Google pages on 'european commission cartel').
    • US-based companies sell lots of stuff in Europe, and therefore have plenty of opportunity to do illegal or suspect things: there is a reason North-Korean companies are rarely sued.
  18. Re:US Companies by drsquare · · Score: 1

    Maybe European companies don't think they're above the law. Maybe there's something in the American corporate mentality that makes them think they're special and can do anything without any consequences.

  19. Re:US Companies by MadMidnightBomber · · Score: 1

    If only there were a way of looking up information such as this, perhaps in the form of a simple web page with a free text query? Perhaps there might be some money to made in developing such a tool.

    --
    "It doesn't cost enough, and it makes too much sense."
  20. Re:We all know litigation... by KarmaMB84 · · Score: 2, Insightful

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

  21. Re:US Companies by rajafarian · · Score: 2, Funny

    Maybe European companies don't think they're above the law. Maybe there's something [my emphasis] in the American corporate mentality that makes them think they're special and can do anything without any consequences.

    I think it's called experience.

  22. Re:US Companies by Spliffster · · Score: 1

    " ... but it seems like the EU picks on US companies a lot."

    It's Intel vs. AMD. Both US companies AFAIK. Maybe the EC just takes the words "competition", "monopoly" and "free market" more serious than other areas of this planet do ?

    Cheers,
    -S

  23. Well, it depends by Sycraft-fu · · Score: 1

    There was a time when you couldn't give me an AMD chip. I had been burned badly by VIA and AMD motherboards (who were the only chipset makers at the time for Athlons) in a couple cases and I just wouldn't use them. Sorry, but I expect more reliability out of my personal and especially professional systems. I could see a computer maker feeling similar. Obviously free processors would only be a short term teaser, and if the damn things are going to be nothing but problems, well then who wants them?

    I'm not saying this is necessarily the case, but I could see it. After the problems I had with the motherboards, I wouldn't touch AMD for a long time. I could see a computer manufacturer having people who feel similarly. Thus while Intel's sweetheart deals certainly helped, they may well have not been the only determining factor.

  24. Re:US Companies by Dragonslicer · · Score: 1

    It is not our fault that some of you don't know what happens arround the world. To be fair, any of those things that happen to European companies that don't do significant business in the United States wouldn't really be news here. I wouldn't fault any Europeans for not knowing what happens to companies that don't do business in Europe, either. It wouldn't surprise me if something as major in the United States as the Enron collapse was no more than an "other news" moment in mainstream European media (though I am assuming that Enron didn't do much, if any, business in Europe, which I may be completely wrong about). You can't expect every country's media to report on everything that happens in every other country in the world.
  25. Re:US Companies by jopsen · · Score: 1

    Yea, the thing is you can't get that kind of experience in Europe. Unless of cause you export a lot to the US... :)

  26. Re:US Companies by Remusti · · Score: 1

    If you trade in Europe, you have to abide by european law. It is as simple as that. The US just seems to have more monopolies than anyone else.