Intel guilty, fined €1.06 billion by EUMonopoly Fail. Do not pass go, do not collect €200By Sylvie BarakWednesday, 13 May 2009, 11:27THE VERDICT IS IN, and Intel has been found guilty as charged by the EU for abusing its dominant market position, with the chipmaker being fined a whopping €1.06 billion.Neelie-kroesThe EU said Chipzilla had violated EC Treaty antitrust rules under Article 82, abusing its dominant market position "by engaging in illegal anticompetitive practices to exclude competitors from the market for computer chips called x86 central processing units (CPUs)".Neelie Kroes, EU Competition CommissionerThe EU Commission said it had found Intel guilty of two kinds of nefarious illegal practice, the first of which was giving "wholly or partially hidden rebates to computer manufacturers on condition that they bought all, or almost all, their x86 CPUs from Intel", whilst the second was Intel's direct pay-offs to OEMs to stop or delay the launches of products containing its competitors' chips.The commission said it also found Intel guilty of making "direct payments to a major retailer on condition it stock only computers with Intel x86 CPUs," saying that these moves "effectively prevented customers - and ultimately consumers - from choosing alternative products.""By undermining its competitors' ability to compete on the merits of their products, Intel's actions undermined competition and innovation" said a Commission press release.Along with the €1.06 billion fine, Intel has been ordered to stop its antitrust behavior immediately and told the Commission will actively monitor its compliance. The fine is equivalent to $1.44 billion, a very hard whack to Intel's bottom line, considering the firm had $3.5 billion in cash on its balance sheet at the end of Q1.Giuliano Meroni, AMD's EMEA president, told the INQ "The EU decision will shift the power from an abusive monopolist to computer makers, retailers and above all consumers".
Intel CEO says EU decision "wrong"Will appealBy Sylvie BarakWednesday, 13 May 2009, 11:41INTEL CEO, Paul Otellini, has said his firm "takes strong exception" to the EU verdict declaring Intel guilty of breaching European antitrust laws."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," said Otellini, adding "there has been absolutely zero harm to consumers. Intel will appeal."The EU fined Intel €1.06 billion for "engaging in two types of practices which have harmed competition". The European Commission said Intel has been found guilty of using rebates to freeze competitors out of the X86 market and making direct payments to OEMs to delay the launch of competitor products and stock only computers with Intel x86 CPUs.In response, Otellini has said he doesn't believe Intel's practices "violated European law," saying it was all just the "natural result of a competitive market with only two major suppliers" where one firm "wins sales, the other does not".Otellini raged against the EU machine, claiming that the directorate general for the Competition Commission "ignored or refused to obtain significant evidence that contradicts the assertions in this decision".This "significant evidence" purportedly shows "that when companies perform well the market rewards them, when they don't perform the market acts accordingly." Yes, but a little bit of rebate stick and carrot doesn't hurt either, does it Intel? Oh, wait, actually it does. Ouch.The Intel chief denied Intel had sold its wares off cheaply to court OEMs, adamantly declaring "Intel never sells products below cost". He admitted, however, his firm did believe it could "discount our products to compete in a highly competitive marketplace".Otellini said that despite his "strongly held views" on the matter, his firm would "work with the Commission to ensure we're in compliance with their decision."So, what does this mean? In a question and answers sheet released by the EU along with its statement, the commission says "Intel is obliged desist from the specific practices identified in this case and not to engage in these or equivalent practices in the future." This holds true for "any abusive practices that have an effect within the European Economic Area (EEA)."The EU, cleverly anticipating Intel's shriek that the Commission was simply stifling technological innovation, explained the firm had itself stifled innovation and limited consumer choice "by preventing innovative products for which there was a consumer demand from reaching end customers". It added that, "Such practices deter innovative companies which might otherwise wish to enter and compete in the market."The EU was also emphatic the case was "about the conditions associated with Intel's rebates and payments, not the rebates and payments themselves," adding, "What is at stake here are loyalty or fidelity rebates".The commission also says Intel "paid clients" to delay or not launch computers incorporating AMD CPUs, something Intel General Counsel, Bruce Sewell, vehemently denied, saying "that's not how we do business." µClick here to find out more!
Intel's general counsel "mystified" and "dismayed"Shocked, shocked we tell you!By Sylvie BarakWednesday, 13 May 2009, 13:53INTEL'S LEGAL TEAM has donned its red gloves and is in fighting form today, as Intel Senior Vice President and General Counsel, Bruce Sewell, held a press conference in Brussels, where he claimed to be "dismayed" at the EU Commission's verdict that his firm was guilty of breaching EU antitrust laws.With no attempts to hide the bitterness towards its far smaller competitor AMD, Sewell reminded his audience just who instigated the antitrust case almost 10 years ago, on claims that if Intel wasn't regulated, AMD would die. "Eight years later, our competitor, and the sole complainant in this case is alive, healthy, and claims to be expanding its business," complained Sewell.As the European Competition Authority declared Intel's in violation of EC antitrust laws, ordering the multibillion dollar firm to change its business practices and pay a €1.06 billion fine, Sewell claimed to be "somewhat mystified" at what Intel was expected to change in terms of sales and pricing practices.He also expressed dismay "that in a time of such acute economic turmoil the Competition Authorities have seen fit to intervene in what is by all objective measures an innovative, dynamic and competitive market."Sewell said EU claims accusing Intel of lowering prices and doling out rebates to OEMs on the understanding they stop buying or supporting AMD products were "false." He emphatically argued that "Intel has never required a customer to agree not to buy from AMD in order to obtain a discount, nor raised a customer's prices when it decided to buy from AMD."Sewell did say, however, that "like every company Intel competes to win as much business as it can" adding "every time Intel wins a sale, or secures preferential marketing terms, one of our competitors loses out on that sale or marketing relationship," something he referred to as "the essence of true competition."Regulations, said Sewell, "should not prevent one company, no matter how large that company is, from offering discounts or providing incentives." He said Intel offered customers incentives to purchase its products, but that those incentives were "matched by AMD at various times in the past."Sewell categorically denied any cash pay offs to OEMs and said that "at no time were the discounts [offered to OEMs as incentives] below cost."Painting OEMs as the poor victims of an Intel crime was ridiculous, said Sewell, who claimed OEMs had been the ones to approach Chipzilla in the first place asking for rebates and incentives to buy their products over AMD's.Intel is apparently also outraged the EU chose to rely on what Sewell called "hearsay" to convict the firm, rather than what Intel reckons is "sworn evidence" contradicting its guilt. He also asked the question, "can rebates be anticompetitive?" Well, yes, Intel, apparently so.Referring to the huge fine, Sewell said "the amount is arbitrary. It bears no relationship to any actual or proven harm or injury," fatalistically adding, "But, so be it". Sewell said the firm will take out a bank guarantee for the cash, but would not pay the fine immediately, as the firm is planning to appeal the decision within 60 days."We will respect the proper administration of justice within the EC," said Sewell, adding "we will comply with all appropriate measures to secure an undertaking in the amount of the fine, and we will defend ourselves vigorously by appealing this matter to the Court of First Instance."Sewell also said he couldn't "comfortably" say he understood what Intel was being asked to do by the commission, as the firm had only been provided with a summary of the final decision, and would have to wait for the full version in order to "change business practices accordingly." µ
Intel releases corporate responsibility reportOh the ironyBy Sylvie BarakWednesday, 20 May 2009, 20:46DESPERATELY SEARCHING for ways to make itself seem more wholesome in the court of public opinion, after embarrassingly having been found guilty of anti-competitive behaviour for the third time, Intel has published a Corporate Responsibility Report to highlight all of the good things it does when it's not too busy freezing competitors out of the market.The report highlights all the wonderful stunts Intel has pulled to get publicity for addressing social and economic issues, the environment and education, and it promises to continue trying to distract the world from its dodgy business practices through more of the same in the future.In rather banal, trite fashion, the huge chip firm promises to make "innovation and growth" a "strategic priority" in the next few years. As opposed to stagnation and shrinkage, we assume.As if a full back-slapping report wasn't nauseating enough, Intel CEO Paul Otellini also chimed in to add a dollop of cheese to the mix, emphasising the importance of "engaging employees to apply technology and expertise to tackle serious challenges." After all, how can one go wrong by doing things that are good for business and benefiting the world? Sheesh, we don't know. Ask the EU. Or Korea. Or Japan."Despite today's economic downturn, Intel's commitment to corporate responsibility is unchanged," said Michael Jacobson, Intel's director of corporate responsibility, likely whilst mentally subtracting $1.45 billion from the corporate salary budget.Jacobson added that the future will bring a number of opportunities for Intel to be a good corporate citizen, waxing lyrical about global challenges such as climate change, the digital divide and "access to quality education and health care."Key highlights in Intel's 2008 report included having trained six million teachers worldwide to teach kids about Intel products, an Intel Foundation IOU for $120 million towards maths and science over the next decade, support for foreign education and the deployment of Intel classmate PCs in 46 countries, where presumably the not-for-profit One Laptop Per Child project (OLPC) can now pack up and go home.Environmentally, Intel wants you to know it has bought itself outstanding green credentials which it has had printed up on recyclable paper and framed. Chipzilla boasts that its purchase of $1.3 billion in renewable energy certificates (REC) back in January 2008 makes it the largest purchaser of green power in the US, although the amount of power that represents is less than 47 per cent of the firm's electricity use.Buying RECs, incidentally, also works out a whole compost load cheaper for Chipzilla than choosing green technology to meet its insatiable appetite for power. But it's nice to know Intel cares, even if it doesn't care quite as much as Google, which invests directly and heavily in renewable energy sources to meet its future power needs.A rather alarming statement in the report claims Intel has "reduced its freshwater needs by three billion gallons per year". Reduced by three billion gallons?! What on earth was it reduced from, 300 billion?Intel also claims it will be investing "over $5 million on more than 30 projects in an effort to save at least 30 million kWh of electricity and 750 therms of fossil fuel each year in operations." First one to get out their calculator and solve what that might actually mean wins a prize. The company also waffles on about being "on track to meet the goal of reducing absolute emissions 20 percent by 2012 from a 2007 baseline," an annual improvement of just four per cent.Something truly noteworthy in the report, however, is its statement that 54 percent of Intel's employees donated 1,346,471 hours of community service to schools and nonprofit organizations in over 40 countries last year. What the other 46 per cent were doing while most of their colleagues were out helping others is beyond us, but it is an admirable statistic all the same.Also worth a mention is that the Intel Foundation shelled out $8.5 million in matching grants for schools and nonprofits in need of funding.So, no, it's not all bad Intel, but Chipzilla still has a ways to go before the bitter taste of antitrust might disappear. µ
