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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."
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.
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.
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).
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!