Intel's Otellini accuses the EU of being anti-American
Only successful US companies regulated
INTEL supremo Paul Otellini is worried that the European Anti-Trust regulators are only walloping US outfits.
Speaking to Business Week, Otellini said that he found statements by EC Competition Commissioner Neeley Kroes about Europe's role in regulating " dominant" companies "very troubling".
He is apparently 'troubled' by the fact that the European Union charged Intel in July with violating antitrust rules by selling chips below cost to strategic customers.
But he noted that Kroes seemed to be only interested in outfits like Intel, Microsoft and Qualcomm who were all proud to fly the US flag outside their offices.
Otellini pondered where the EC was going with this argument in the long term. After the commissioner's definition of dominant company was a US definition of "success".
In the current case against Intel, the Commission's basic argument is that Intel sold under cost, he said.
Otellini said that argument is flawed and if Kroes relies on that, Intel will "fare fine".
Still, he sighed, the worst case scenario is that he might have to write a cheque, even if fines in the current case could be as high as $3.2 billion.
More here .µ
Comments
There's always something to learn....
I didn't know that RyanAir, Fiat, Toyota and all the other companies who have had an unfavorable outcome from the EEC antitrust were American....I did know that Italy is an american Colony (while Ireland and Japan are just close firends), but it seems that Intel consider those nations as new US states.
That would be kinda cool, I won't need a green card the next time i cross the pond....
selling under cost
I think this is a COMMON tactic in most business regardless of if you are located on the left or right side of the pond.Stores do it all the time in hopes of driving up sales on other items. Sell that LCD for under cost and make up the difference when the punters buy cables, an entertainment center and maybe a Hi-Def gaming system or disc player.
New car dealerships sell under cost as well instead taking their profit from the money the manufactures give them each time they sell a new car.
Drug companies give doctors free meds to hand out in the hopes that the doctors will begin prescribing these when their samples run out, and sick people will ask for them because if it wasn't a good drug then why would the doctor have given them a sample to begin with.
Telcos and Cable companies sell services under cost if you bundle, or sign a contract.
Look like the commission will be busy for a long time to come... but I wouldn't bet on it (even if my bookie has offered to sell me a bet at under cost saying that they will!)
what's "under cost" anyway?
Paul Tortellini is rightfully concerned with the EC argument of "selling below cost" as it is rather hard to define what is the cost of manufacturing a microprocessor, anyway.Of course each manufacturer knows what their average cost per die is. But then, what about binning? As we all know, the good processors from the fab are sorted by the top speed that they can perform well at. These "speed bins" are sold at different price points, which the EC will hardly argue with. Now, how do you measure "below cost"?? Neither Intel nor AMD nor any semiconductor vendor, for that matter, will offer data on their real cost per die, their yields, nor their bin split numbers. All of these are top secret data. So, how can anyone tell if you are selling below cost?
On another note, "strategic customers" sounds like bogus. Anyone knows that in the business world, "strategic" is a synonym for "we'll lose money". So IMHO the best you can do with "strategic customers" is to drop them right away.
"strategic"
Strategic customers - they actually are in most cases. Meaning that it is a strategic choice to dump cheap stuff on them to prevent them from buying their chips from the competition, who could sell their chips at a profit.Big business is a sickening sign of the times. Watch closely what most of these "successful" companies are doing in the market and you soon get an idea of what tactics are being employed. Why is a certain games console sold below cost (well known fact) - just to gain market share in a way that prevents any competition that would need to be generating profit. Thàt is why selling below cost is illegal. And so it should be.
1+1 = 1.03
That's the Intel math for determining what Q6600 is worth vs. cost.One E6600 is $229, but two in Q6600 is only $70 more.
That's the new math, I guess.
Defintiion of Below Cost
Selling it for less than it actually costs you to make!So Intel with huge proft margins from other regions says "Hey lets make a loss for a couple of months in a particular region to Keep AMD out, then ramp up the price once they've left", allegedly of course.
Ottelini=Fool
The argument is not only about selling below cost but charging different rates if you did not also use any other chips they had developed.Along ,with giving preferential treatment to some customers and treating others poorly or not at all because they had the gal to use CPUs from the competition.
That is predatory pricing and behavior ,pure and simple.
Trying to play that Anti-US angle is cheap stupid maneuver by Mr.Ottelini.
AMD is located in California ,correct ?
what about the other charges?
What about the other EU charges, e.g. offering large discounts to computer companies on the condition they don't use products from AMD, or compelling vendors to delay AMD product launches? Why does Otellini only focus on the discount charge? Probably because it's the easiest to obfuscate. His "anti-American" premise is laughable. And something smells funky at the FTC. If they aren't willing to investigate a company with 90% share of a global market who has been charged in the past with illegal business activities, and is currently being investigated by hosts of other countries, then what exactly does it take to get investigated by the FTC? I wouldn't know the answer to that, because they're not talking.what about the other charges?
What about the other EU charges, e.g. offering large discounts to computer companies on the condition they don't use products from AMD, or compelling vendors to delay AMD product launches? Why does Otellini only focus on the discount charge? Probably because it's the easiest to obfuscate. His "anti-American" premise is laughable. And something smells funky at the FTC. If they aren't willing to investigate a company with 90% share of a global market who has been charged in the past with illegal business activities, and is currently being investigated by hosts of other countries, then what exactly does it take to get investigated by the FTC? I wouldn't know the answer to that, because they're not talking.Paul, welcome to socialism
Paul,What are you complaining? It's socialism (relative to US standard) at work.
European also pays fine
For example, 5-10 years ago, ABB had to pay 100 million Euro for having a cartel for tubes.Much smaller market than processors and software, but still fines of 1/4th of Microsoft. Actually, 400 million Euro for Microsoft was too small, and should probably have been much larger.