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Intel Receives Record Fine By the EU
Firefalcon writes "Intel has been fined a record 1.06 billion euros ($1.45 billion / £948 million) by the European Competition Commission after being found guilty of anti-competitive practices. This makes Microsoft's 497 million euro fine in 2004 (which was a record at the time) seem like a slap on the hand. Reports had previously suggested that the fine would be similar to Microsoft's. Intel was charged (among other things) with encouraging manufacturers and retailers to purchase fewer (or even not stock) AMD processors. More details of the ruling are on the European Commission's Competition website. Intel said they will appeal the fine."
Yeah I'm sure the 2 for each EU resident will save the whole continent
The AACS key is NOT 0xF606EEFD628B1CA427BEA93A9CA9773F
There's a bit of a difference between offering a volume discount and a discount that specifically hinges on you not purchasing a competitor's products.
Volume discounting means "buy more and we give you a discount". What they were doing was "don't buy from others and we give you a discount.. you don't even have to buy more from us". There's a very clear difference between that and Sam's Club's discounts.
Never underestimate the bandwidth of a 747 filled with CD-ROMs.
Without knowing exactly where it goes I can only speculate, but could this fine by so high to help fix European budgets stretched too thin by a weak economy?
No, it would not even be enough to fix the buget of a single EU country, but high enough that intel basically feels a smack on the hand,
besides that the entire thing now goes into revision several times and by the time everything is settled the economy crisis is over.
Intel's "crime": "'Intel awarded major computer manufacturers rebates on condition that they purchased all or almost all of their supplies, at least in certain defined segments, from Intel.'
This is called "volume discounting". Office Max and Sam's Club are guilty of similar "crimes" and "anticompetitive" behavior, it seems.
You are wrong because a rebate happens after the fact. A volume discount is provided up front. Intel has always provided volume discounts, and still does, and nobody is complaining about that. The complaint is that intel is instead promising to give money if the manufacturer shuns AMD, then delivering the payment. This is similar to Microsoft threatening to raise OEM prices if OEMs bundled certain software or sold machines with other operating systems installed.
The second case is pretty clearly anticompetitive; the first case is, after thinking about it for like two fucking seconds also quite anticompetitive. You're FREE to say "if you buy ten times as many units from me, I'll give you a discount." That's not what's happening here. Instead, it's "I'll give you this great price, but only if you don't buy anything from my competitor." Maybe you think that should be legal, okay. But it's still different from a volume discount.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
It must be really worth it for these big companies to risk millions in fines to making competition suffer.
I always wondered if they really make that much more money (after the fine) or if what they really are after is the destruction of the competitor (AMD in this case)...
This is just the fine for doing this in the EU, I'm sure the courts in the rest of the world will be happy to add their own penalties for their own jurisdictions, and I'm sure that in many jurisdictions AMD (and other chip makers) will be able to claim damages too.
A pizza of radius z and thickness a has a volume of pi z z a
Sounds like a necessary part of business?...
No. This behaviour is anticompetitive. It deprives consumers of choice and the benefits of healthy competition such as lower prices. It is one thing to severely undercut your competitor...that's basic competition and part of free market trading.
However, preventing the competitor from even being considered at consumer level benefits no one but Intel. OEMs are strongarmed, consumers have less choice, competitors go out of business. This is the Monsanto of chip business.
I never get used to these constant resurrections
Yes. Just like breaking a few legs is a necessary part of running a protection racket.
Good. Very good. They will be selling less of their CPUs and motherboards, and their competition will be selling more.
A bit like how the US invaded a Iraq (on false pretenses) causing billions of dollars worth of damage. Brought in US giant companies to rebuild the country and then starting whining about how the rest of the world should contribute to the reconstruction?
Could also be explained something like this...
1. Burn down your neighbours house.
2. Contract your Brother to rebuild it.
3. Get kickback from your brother.
4. Profit!!!
"I have downloaded hundreds and hundreds of records, why would I care if somebody downloads ours?" Robin Pecknold
Risky? Courts in the EU are a lot saner than their US counterparts. Don't want to get slapped with antitrust fines? Obey the law. Really. It's not hard. Sell a better product at a lower price, for example.
If I was intel I'd pay my fine and get out.
Good thing you're not Intel. Or running Intel. You would have tried to fix one bad business decision (shady anticompetitive deals) with another really bad business decision (abandoning a significant portion of your market).
About the same time they decided not to use UTF-8 like every other website ....
Puteulanus fenestra mortis
How to prevent being fined for anti competative behaviour:
Step 1: Instead of encouraging customers to not buy other vendors products, encourage customers to buy your products.
That wasn't so hard now was it?
I am the lawn!
It's exactly this kind of mentality that creates the problem. Somewhere along the axis of time US corporations felt it was ok to behave in this way. Of course the US haven't done much to prevent this, no trolling, the article speaks for itself not to mention the MS fine also dealt by the EU. If the US wouldn't look the other way just because it's a big corporation we wouldn't have this problem to begin with.
I am the lawn!
I stand corrected. But I still maintain that the EU doesn't plan to just stop with Intel.
Well, I certainly hope not. Anticompetitive business practices need to be punished, no matter how big or important the company is.
But haven't I heard of people becoming the "exclusive" supplier for companies? Isn't this really just a normal business tactic?
It depends; you can be the exclusive supplier if they're simply not buying from anyone else because they have decided your solution is the one to go with. It's pretty hard to actually get caught acting anticompetitively if you're smart, which is why odds are if you're actually hearing about a violation, it's a major one.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
They had evidence from emails that these secret deals were occurring and AMD couldn't even give a computer manufacturer a million free chips because Intel would punish them. That's blatantly illegal. So if your argument is that Intel shouldn't have to obey the law, then that argument encourages illegal behavior.
Exactly, and when you come to think of it things were going great for AMD. I remember the K6/K6-2 generation that was half the price of Intels chips. While they weren't "as powerful" they damn sure weren't far from it. And for about half the price of Intels chips their prices beat the living shit out of Intel. Then came the Athlon/Duron generation followed by 64 bit architecture. By this time AMD was in the lead, still sticking to their fair pricings. Intel on the other hand of course sought to expand/maintain its business to business activities. Nobody really knew why businesses seemed to always pick Intel, and thus their market share was by far larger than AMD.
I'm no AMD fan, at all. They're a business and I'm a consumer. We're both constantly fighting for gain. I want lower prices and higher quality, they want more revenue. It would be, to put it simply, fucking stupid for me to stand on their side. However when Intel began conducting this type of behaviour it naturally hurts AMDs business, but as I said I couldn't care less about AMD. What I do care about is that I was getting good quality for a low price and due to Intel I'm no longer getting this. So from a consumers point of view: fuck Intel for meddling in my business, not AMDs.
I am the lawn!
First, you do realize there is a difference between a civil and criminal law? Second, the commission that levied the fine does not have the authority to throw Intel's board into jail.
Of course I'm well aware of those facts. The law needs to be changed so that CxOs of criminal corporations can suffer criminal penalties. These bastards effectively stole billions of dollars, and they get less of a penalty than someone who holds up a 7/11 for a hundred bucks. This is not justice, and it's not a deterrent to future behavior. Hard prison time for these criminals is the only answer.
Give me Classic Slashdot or give me death!
The free market is imperfect. Monopolies, imbalance of information, and externalities can all skew the market unfairly, harming both buyers and sellers.
What Intel did was clearly wrong, harmful to the free market, and to society as a whole. Adam Smith himself admitted that markets need regulation in order to remain free. This is one such case.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
Since May 2002, when trolls started abusing bidirectional control characters.
So someone decided to throw the baby out with the bathwater, huh?
Ezekiel 23:20
Siemens Market Cap: Ã 45.85 billion Intel Market Cap: Ã 62.26 billion
That's silly. For Intel, CPUs are probably 75% of their revenue. For Siemens, energy distribution is probably like 2-3% of their revenue.
There was more interesting case against 3 major EU-based elevator companies who essentially divided market (refusing customers belonging to competitors' turf) and fixed prices. Since their were engaged in the activities for more than a decade, fine was IIRC 3 times of a year profit. And unfortunately for the companies, the year before the conviction was pretty good financially for all of them.
All hope abandon ye who enter here.