Tech and Web NEWS

An evidences, Intel-EU anti-trust fight

By Amarendra Bhushan for CEOWORLD Magazine Updated:September 22, 2009

European Union had imposed a record €1.06 billion fine against Intel in May accusing the computer chip giant of trying to create a monopoly in the microprocessor market.

According to an internal Intel email cited in the EC document, Intel’s rebates to Dell between 2002 and 2005 meant the PC maker had to exclusively use Intel CPUs, or face “severe and prolonged” retaliation.

Intel was also accused of placing other restrictions on manufacturers. HP was told to sell AMD-based machines to small businesses only, and – at the risk of losing Intel cash – was encouraged to hold off launching an AMD-based desktop by some six months.

However, according to Intel this evidence has been skewed by a biased regulator. “Intel has reluctantly concluded that the Commission initiated the investigation with a predisposed view to alter the results of competition, and consequently tended to assess the evidence with a prosecutorial bent to confirm its point of view,” the company says in an extensive statement released on its site.

Here are some of the examples that were brought by the European Commission:

“Intel rebates to Dell from December 2002 to December 2005 were conditioned on Dell purchasing exclusively Intel CPUs. For example, in an internal Dell presentation of February 2003, Dell noted that should Dell switch any part of its CPU supplies from Intel to its competitor AMD, Intel retaliation ” could be severe and prolonged with impact to all LOBs [Lines of Business].”

“Intel rebates to HP from November 2002 to May 2005 were conditioned in particular on HP purchasing no less than 95% of its CPU needs for business desktops from Intel”

“Intel rebates to Lenovo during year 2007 were conditioned on Lenovo purchasing its CPU needs for its notebook segment exclusively from Intel. For example, in a December 2006 e-mail, a Lenovo executive stated: ” Late last week Lenovo cut a lucrative deal with Intel. As a result of this, we will not be introducing AMD based products in 2007 for our Notebook products”.”

“Intel payments to Media Saturn Holding (MSH), Europe’s largest PC retailer, were conditioned on MSH selling exclusively Intel-based PCs from October 2002 to December 2007. For example, in a submission to the Commission, MSH stated: ” It was clear to MSH in this regard that the sale of AMD-equipped computers would result at least in a reduction of the amount of Intel’s contribution payments per Intel CPU under the contribution agreements (and thus in a reduction of the total payments received from Intel, even if the total volume of Intel-CPUs sold by MSH would have remained the same as in previous periods), although MSH never actually tested the issue with Intel.”.”

“Between November 2002 and May 2005, Intel payments to HP were conditioned on HP selling AMD-based business desktops only to small and medium enterprises, only via direct distribution channels (rather than distributors), and on HP postponing the launch of its first AMD-based business desktop in Europe by 6 months.”

“Intel payments to Acer were conditioned on Acer postponing the launch of an AMD-based notebook from September 2003 to January 2004.”

“Intel payments to Lenovo were linked to or conditioned on Lenovo postponing the launch of AMD-based notebooks from June 2006 to the end of 2006. For example, in a June 2006 e-mail, a Lenovo executive reported that: “[two Lenovo executives] had a dinner with [an Intel executive] tonight (…). […] When we asked Intel what level of support we will get on NB [notebook] in next quarter, [he] told us (…) the deal is base[d] [sic] on our assumption to not launch AMD NB [notebook] platform. (…) Intel deal will not allow us to launch AMD”.”

Intel believes that its business practices are completely legal and that the decision of the EC is wrong.

“Intel is convinced that the Commission’s conclusions regarding its business practices are wrong, both factually and legally. Intel has appealed the Commission’s decision. We are committed to ethical business behavior and compliance with all applicable laws and regulations governing business practices. Intel has adhered to those standards and acted legally at all times in this matter,” an official statement by Intel reads.

EU published a 518-page document that detailed the evidence. The documents carried emails that supported the fact that Intel provided rebates to PC makers.

One email cited a Dell Inc. executive worried in Feb. 2004 about the consequences of doing business with AMD, which launched a new chip in the market. “It looks 100% certain that Intel will take [rebates] to ZERO for at least one quarter while they review all of the numbers and implications,” he stated.

EU also provided evidence from Hewlett-Packard Co. (HP), Acer Inc. of Taiwan, NEC Corp. of Japan and Lenovo.

A mail from HP, dated September 2004, said, “You can NOT use the commercial AMD line in the channel in any country, it must be done direct. If you do and we get caught (and we will) the Intel moneys (each month) is gone (they would terminate the deal). The risk is too high.”

In another e-mail, an executive from Lenovo stated that he was working on a deal that would require transferring all shipment business for the remaining calendar year to Intel in exchange for “millions of dollars”.

EU did not reveal the names of senders and receivers of emails or how the big rebates were paid.

Like this article! ‹ Netflix awards $1 million in recommendation contest Project Pink: Microsoft-branded Windows Mobile-based phone ›
Share this Post: Get It Delivered To Your Inbox