Naughty Intel.
If you are going to abuse your dominant market position, it doesn't pay to do it in Europe.
If you are going to abuse your dominant market position, it doesn't pay to do it in Europe.
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Intel fined a record 1.06bn euros ($1.45bn; £948m) by the European Commission
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Ouch.
They make a colossal amount of money, but $1.45bn is a s*** load in anyone's book.
Look out for price rises from Intel in the EU. Someone's got to pay to balance the books, right?
They make a colossal amount of money, but $1.45bn is a s*** load in anyone's book.
Look out for price rises from Intel in the EU. Someone's got to pay to balance the books, right?
Ouch.
They make a colossal amount of money, but $1.45bn is a s*** load in anyone's book.
Look out for price rises from Intel in the EU. Someone's got to pay to balance the books, right?
Tricky situation. They lost market share to AMD for the first time in 4 years last quarter, and they've now been banned from paying stores to only sell Intel powered computers amongst other things. While their lower powered chips appear to run quicker than AMD's, it would not take a lot in this climate to push manufacturers towards AMD if they were cheaper for similar performance.
Saying that, I think the prestige of Intel would be preferential to some companies. I certainly can't see Apple moving to AMD anytime.
The money will be going into the central budget (pending all appeals) and will reduce the amount each member state has to pay.
It was rumored that they would get a fine up to 4 billion (fines can be up to 10% of the annual income), so it could have been much worse!
Add to that that AMD (as well as other competitors??) and final consumers are entitled to ask for damages suffered during the abuse, it makes it a very bad move from intel!
"There has been absolutely zero harm to consumers."
And for European legislation it doesn't matter at all if there has been no harm for the final consumer - which is still questionable. It is sufficient that the dominant's behavior results in a distortion of competition in the relevant market.
AMD probably have a reasonably strong case as they are the second big player and only real other choice in terms of home PCs at during the time of this incident. However I feel it would probably be limited to them. Any other company might just tack onto AMD's side and hopefully get a little extra that way but on their own merits I am not so sure.
I heard that defense and thought it was silly.
I was driving at 100mph but I didn't hurt anybody.
They broke the law and got caught out. Is the fine excessively punitive? Well as you said it could've been a lot higher and I feel that the EU would've looked into the level of fine to try and balance it out. Will be interesting to see if they follow through with their appeal (and with the fine at $1.45billion you would be stupid not to) and to see the outcome.
My question is are they doing this court case for thing in EU or are they basically suing them for practices Intel has with the same list of companies for other parts of the world.
For example are they doing it for Acer who sells in the US but Acer does sell in the EU. So because Acer sells in EU intel can not give them money for only selling Intel chips in the US. If that is the case then I believe the EU is MASSIVELY over stepping it bounds.
Please note this is hypothetical and mostly question if the EU doing fines and what not outside of the boarders of the EU.
As for what intel doing, this would not be the first time Intel gotten in trouble for it. I believe in the past they got in trouble in the US for the same thing.
Thanks. I had assumed that it would be something along those lines but I wasn't sure exactly.
I don't entierly unerstand your quesion(s).
I think you mixed up the suing and the sanction parts: the European Commission is and administrative body and is the enforcer of the European law (e.g. competition law), and is entitled to sanction undertakings that infringe them. Different case is AMD suing intel: AMD is a private undertaking who is entitled to sue intel if it believes that by infringing the law intel has caused them any kind of harm (e.g. loss in profit).
No, the Europen Commission can only enforce the European law so it can only sanction intel's actions which have effect within the European Union territory. Every nation has its own Competition Authority - to make this clear you can think of killing 2 different persons in two different countries: you will be prosecuted by two different authorities and judged by two different judges, with two different possible outcomes.
I entierly agree with you. But I think that in US is a requirement to harm consumers in order to get sancioned. In Europe its a different story.
obviously such fines have to hurt a company or otherwise practices don't change
and on intel giving the fine further along the chain to the customers: keep in mind that doing so would hurt their profits since the competition then looks better
and on intel giving the fine further along the chain to the customers: keep in mind that doing so would hurt their profits since the competition then looks better
These types of fines never hurt the company. It only hurts stockholders (and generally common stockholders at that) and the company's customers (in the form of higher prices).
$1.45 billion is a lot of money. It has to come from somewhere (R&D, promotional pricing, etc).
EU Hits Intel with $1.45B Fine for Antitrust Violations
WOW! I wonder where all that money goes?
On Wednesday, the European Union ordered Intel to pay a significant fine of 1.06 billion euros ($1.45 billion), charging Intel with several violations of anti-competitive practices.
The violations covered a period of five years and three months, and concerned interactions the company had with Acer, Dell, HP, Lenovo and NEC, as well as with Media Saturn Holding, a retailer who also sold Intel-based PCs. The EU predicated its fine on Intel's 2007 revenue, which totaled 27.97 billion euros or $38.8 billion.
Specifically, the EU charged Intel with interfering with the sale of PCs containing processors from rival AMD; the EU charged that illegally used its market power to prevent AMD from competing in the market. Intel used its monopoly market power in two ways to prevent MD from competing, the EU said: rebates to those OEMs who chose to buy Intel's products, and payments to those OEMs not to buy from AMD.
Unsurprisingly, Intel said it would appeal. "Intel takes strong exception to this decision," Intel chief executive Paul Otellini said in a statement. "We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal."
For its part, the European Union's competition commissioner Neelie Kroes said that Intel's actions were widespread, and spread over a substantial period of time. "Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," Kroes said. "Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated."
The EU's actions are just part of an ongoing investigation of Intel's practices throughout the world, spurred on in large part by AMD, which has publicly complained that Intel has used its market power in an illegal fashion. AMD issued a formal complaint to the EU in 2000. But South Korea ordered fines of 26 billion won in June for anticompetitive behavior, or just under $20 million; Intel appealed. Intel also said it would alter its behavior in Japan. AMD, meanwhile, has sued Intel within the United States, and the FTC is also investigating, as is the state of New York.
"Today's ruling is an important step toward establishing a truly competitive market," said Dirk Meyer, AMD's president and chief executive, in a statement. "AMD has consistently been a technology innovation leader and we are looking forward to the move from a world in which Intel ruled, to one which is ruled by customers."
The allegations
Although the EU did not actually tie a specific OEM to a specific allegation of Intel misconduct, the EU did give several examples of how Intel allegedly illegally used its monopoly power.
In the issue of rebates, for example, Intel allegedly coerced one OEM to buy exclusively from Intel, and for another to purchased 95 percent of its chips from Intel. In three of the cases, the time period covered the fall of 2002 until about the end of 2005.
"Intel structured its pricing policy to ensure that a computer manufacturer which opted to buy AMD CPUs for that part of its needs that was open to competition would consequently lose the rebate (or a large part of it) that Intel provided for the much greater part of its needs for which the computer manufacturer had no choice but to buy from Intel," the EU said. "The computer manufacturer would therefore have to pay Intel a higher price for each of the units supplied for which the computer manufacturer had no alternative but to buy from Intel. In other words, should a computer manufacturer fail to purchase virtually all its x86 CPU requirements from Intel, it would forego the possibility of obtaining a significant rebate on any of its very high volumes of Intel purchases."
It is important to note, the EU said, that the EU did not object to the rebates, but to the conditions tied to them.
Intel, for its part, said that its actions were the natural result of a duopoly. (Via Technologies, a third CPU manufacturer, commands less than 1 percent of the market.)
"We do not believe our practices violated European law," Otellini said in a statement. "The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not. The Directorate General for Competition of the Commission ignored or refused to obtain significant evidence that contradicts the assertions in this decision. We believe this evidence shows that when companies perform well the market rewards them, when they don't perform the market acts accordingly."
The EU also charged that Intel had essentially paid off members of the same group of OEMs, in what was effectively a bribe to prevent them from shipping PCs containing AMD microprocessors.
In one specific charge, the EU claimed that Intel enacted a complicated series of conditions on one OEM, for just 5 percent of its business, apparently all from AMD. But in that small percentage, the EU charged, the OEM was prevented from selling AMD PCs except to the SMB market, via direct distribution, and that it postponed the launch of its first AMD business desktop by six months. Other payments were made to other OEMs to encourage them to delay products as well, the EU said.
Industry reaction was naturally polarized.
"If you love jobs and economic growth, you have to love the companies that drive the economy and create employment demand," Ken Ferree, the president of the Progress and Freedom Foundation, said in a statement. "As U.S. policymakers review the EC decision, they should think carefully before adopting a competition policy that handicaps the very companies that are the key to sustaining this country's long-term economic health. Decisions like this do nothing to illuminate the path to a vibrant and growing economy, but rather obscure it."
The question now is what effect the EU's ruling will have on complementary actions within the U.S. Of note was a speech made this week by U..S. Assistant Attorney General Christine Varney, which some saw as a sign of tougher antitrust enforcement.
"U.S. regulatory agencies have indicated this week they will once again be watchdogs on antitrust enforcement under the new Administration," Ed Black, president and chief executive of the Computer & Communications Industry Association, said in a statement. "Since the evidence has been compelling to all those who so far reviewed it, a vigorous US investigation focused on the evidence in the case leaves us believing Intel will have its day of reckoning in the U.S. as well."
Source
WOW! I wonder where all that money goes?
On Wednesday, the European Union ordered Intel to pay a significant fine of 1.06 billion euros ($1.45 billion), charging Intel with several violations of anti-competitive practices.
The violations covered a period of five years and three months, and concerned interactions the company had with Acer, Dell, HP, Lenovo and NEC, as well as with Media Saturn Holding, a retailer who also sold Intel-based PCs. The EU predicated its fine on Intel's 2007 revenue, which totaled 27.97 billion euros or $38.8 billion.
Specifically, the EU charged Intel with interfering with the sale of PCs containing processors from rival AMD; the EU charged that illegally used its market power to prevent AMD from competing in the market. Intel used its monopoly market power in two ways to prevent MD from competing, the EU said: rebates to those OEMs who chose to buy Intel's products, and payments to those OEMs not to buy from AMD.
Unsurprisingly, Intel said it would appeal. "Intel takes strong exception to this decision," Intel chief executive Paul Otellini said in a statement. "We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal."
For its part, the European Union's competition commissioner Neelie Kroes said that Intel's actions were widespread, and spread over a substantial period of time. "Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," Kroes said. "Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated."
The EU's actions are just part of an ongoing investigation of Intel's practices throughout the world, spurred on in large part by AMD, which has publicly complained that Intel has used its market power in an illegal fashion. AMD issued a formal complaint to the EU in 2000. But South Korea ordered fines of 26 billion won in June for anticompetitive behavior, or just under $20 million; Intel appealed. Intel also said it would alter its behavior in Japan. AMD, meanwhile, has sued Intel within the United States, and the FTC is also investigating, as is the state of New York.
"Today's ruling is an important step toward establishing a truly competitive market," said Dirk Meyer, AMD's president and chief executive, in a statement. "AMD has consistently been a technology innovation leader and we are looking forward to the move from a world in which Intel ruled, to one which is ruled by customers."
The allegations
Although the EU did not actually tie a specific OEM to a specific allegation of Intel misconduct, the EU did give several examples of how Intel allegedly illegally used its monopoly power.
In the issue of rebates, for example, Intel allegedly coerced one OEM to buy exclusively from Intel, and for another to purchased 95 percent of its chips from Intel. In three of the cases, the time period covered the fall of 2002 until about the end of 2005.
"Intel structured its pricing policy to ensure that a computer manufacturer which opted to buy AMD CPUs for that part of its needs that was open to competition would consequently lose the rebate (or a large part of it) that Intel provided for the much greater part of its needs for which the computer manufacturer had no choice but to buy from Intel," the EU said. "The computer manufacturer would therefore have to pay Intel a higher price for each of the units supplied for which the computer manufacturer had no alternative but to buy from Intel. In other words, should a computer manufacturer fail to purchase virtually all its x86 CPU requirements from Intel, it would forego the possibility of obtaining a significant rebate on any of its very high volumes of Intel purchases."
It is important to note, the EU said, that the EU did not object to the rebates, but to the conditions tied to them.
Intel, for its part, said that its actions were the natural result of a duopoly. (Via Technologies, a third CPU manufacturer, commands less than 1 percent of the market.)
"We do not believe our practices violated European law," Otellini said in a statement. "The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not. The Directorate General for Competition of the Commission ignored or refused to obtain significant evidence that contradicts the assertions in this decision. We believe this evidence shows that when companies perform well the market rewards them, when they don't perform the market acts accordingly."
The EU also charged that Intel had essentially paid off members of the same group of OEMs, in what was effectively a bribe to prevent them from shipping PCs containing AMD microprocessors.
In one specific charge, the EU claimed that Intel enacted a complicated series of conditions on one OEM, for just 5 percent of its business, apparently all from AMD. But in that small percentage, the EU charged, the OEM was prevented from selling AMD PCs except to the SMB market, via direct distribution, and that it postponed the launch of its first AMD business desktop by six months. Other payments were made to other OEMs to encourage them to delay products as well, the EU said.
Industry reaction was naturally polarized.
"If you love jobs and economic growth, you have to love the companies that drive the economy and create employment demand," Ken Ferree, the president of the Progress and Freedom Foundation, said in a statement. "As U.S. policymakers review the EC decision, they should think carefully before adopting a competition policy that handicaps the very companies that are the key to sustaining this country's long-term economic health. Decisions like this do nothing to illuminate the path to a vibrant and growing economy, but rather obscure it."
The question now is what effect the EU's ruling will have on complementary actions within the U.S. Of note was a speech made this week by U..S. Assistant Attorney General Christine Varney, which some saw as a sign of tougher antitrust enforcement.
"U.S. regulatory agencies have indicated this week they will once again be watchdogs on antitrust enforcement under the new Administration," Ed Black, president and chief executive of the Computer & Communications Industry Association, said in a statement. "Since the evidence has been compelling to all those who so far reviewed it, a vigorous US investigation focused on the evidence in the case leaves us believing Intel will have its day of reckoning in the U.S. as well."
Source
But part of that prestige is due to only Intel being available to consumers. Everywhere you turn, it's Intel. Now Europeans know why.
In my opinion, the problem is that Intel's progress over AMD is partly due to their massive spending on R&D, and so this "crime" they committed not only hurt AMD's sales, it also left AMD with less money for R&D, and slower chips lead to a further reduction in sales. So all of this is a vicious cycle, and it starts with Intel's crime.
I was hoping that part of this fine goes to AMD, but if AMD is entitled to sue Intel for this, then great. I hope they get 2 billion Euro, which would put AMD into a position (again) to give Intel some competition.