Power is the ultimate aphrodisiac - Henry Kissinger
|
|
|
Korea Fair Trade Commission rules against Intel
THE AMERICAN ANTITRUST Institute has taken a crash course in Korean, translating chunks of a 133 page ruling which says Intel abused its market dominance through the use of rebates, bullying customers into choosing its chips over rival AMD's.
Apparently the Korea Fair Trade Commission has found Chipzilla guilty as charged for "unfairly excluding competitive enterprisers" and harming customer interests using rebates in a carrot and stick approach to steer business away from Intel's only (and much smaller) competitor, AMD, in violation of the Monopoly Regulation and Fair Trade Act.
Intel apparently used the dirty trick of selling its wares at "unreasonably low prices" and buying goods or services at unreasonably high prices in order to have its way, something so uncharacteristic (*cough*, NOT) it has us reeling in shock and disbelief.
Samsung was one of the firms named in the suit as having been bullied into choosing Intel CPUs over AMD's back in 2002. Apparently, Intel "continuously requested" Samsung stop buying from its competitors, and when the word "please" didn't work, Intel decided to get abusive, significantly reducing its volume of rebates to the electronics giant in the first and second quarter of 2002. Chipzilla then asked again. With a little ‘aggressive' tone on the "please" no doubt.
Come May 2002, Intel purportedly realised it needed to take things to another level, implementing a "long term support plan" offering sweeteners like maximum-level rebates on the condition, of course, Samsung spent its cash buying blue.
The AAI document reckons Intel put an $800 million rebate proposal on the table in exchange for Samsung dumping AMD CPUs. No prizes for guessing whether or not Samsung took the bait. After all, it would be bad business not to, right? To hell with the moral high-ground.
The document also claims Intel set up something dubbed the "Samsung Risk Mgmt Plan" in January 2002, a master plan of sorts to isolate AMD and leave little Chip Kong out in the cold.
The same shady tactics were used with Sambo Computers in Q3 2003 and sure enough, Sambo folded like a napkin and started swapping AMD CPUs out for Intel's in Q104.
As if that wasn't enough, Intel decided to push Sambo even further, asking the firm not to take part in an AMD product launch of 64-bit CPUs in September 2003 and requesting Sambo keep Intel CPUs at the 70 per cent mark within domestic-consumption PC CPUs from fourth quarter 2004 to second quarter 2005. Sambo agreed and got its reward in rebate blood money.
According to the Korean commission Intel's rebate system was "not a volume discount program but a system where the amount of rebates is reduced or increased according to fulfillment of conditions involving exclusion of competitors, through the determination of ECAP applied items, amount of discounts, and payment of MDF, regardless of partner's purchasing volume".
The committee also reprimanded Chipzilla for "Non-transparency" and for "rendering negative effects on consumer welfare" by pushing the market price way above the competitive market price which could have been reached with a common and simple volume discount policy.
When we confronted Intel's Chuck Mulloy with the ruling, he sighed and said Chipzilla believed there were "significant legal, factual and economic issues with the findings" and that Intel was filing suit in Korea to overturn it. Mulloy said the case would be done "de novo", meaning the entire case will be reviewed and all testimony will have to be sworn testimony - something Intel is quick to point out was not the case with the KFTC.
"You should not assume that ANY of the facts asserted by the KFTC are true" said Mulloy when we put it to him this was just Intel playing the big corporate bully of the playground, again.
"The KFTC opinion does not reflect the reality of the market or what happened. We'll prove that in court" said Mulloy, adding that it was hardly surprising the AAI was siding with AMD as the firm was a paid member and in no way objective.
Of course it remains to be seen how Korea's decision will affect the various other antitrust trials raging against Intel at the moment, but according to one AMD spinner we talked to "the document speaks for itself".
"Take your pick. KFTC, JFTC, EU. Based on the evidence obtained from Intel and its customers, they have yet to convince any antitrust authority that they have not broken the law" he added.
Either way, it certainly seems that when it comes to playing with chips, Intel's favourite board game is a high stakes game of Monopoly. µ
Share this:
Share
i really love to see the verdict in EU sooner. Hope is not as bad as Microsoft case.
Sylvie could write an anti-Intel article? This must be a one-time only I reckon. I still won't sleep with you, Sylvie. Shalom
... it's sad that Korea's penalties on Intel weren't more severe. As I understand it, Intel was reprimanded and that's about it.
Hopefully the EU has the cojones to stand up to Intel.
As far as the US case goes ... judging from recent events in the financial sector, I imagine the US will not only fail to scold Intel for its practices, they'll probably pat it on the back and award it a few billion dollars.
So, any updates on the Fair Trade Commission taking action against Samsung, who went along with the rebate program and also benefited? Oh, that's right, we are using the EU antitrust model where only foreign firms are held accountable and the national firms are apparently unwitting dupes...
So I understand - Intel was found to use unfair practices, but Samsung was an unwitting or unwilling participant and can wash its own hand for their participation in "unfair practices"(poor, weak Samsung, such a small company being bullied by Intel)?
To the poster above... 'solid sounding' is the key - it's not like this was done in a court and used actual evidentiary procedures (of course the EU is no different). And it's "cajones', if you are going to try and sound cool... you should at least get it right.
It's been confimred for years that Intel was violating anti-trust laws to eliminate any competition in the marketplace. The only question is will Korea fine Intel $500 BILLION dollars to stop this chronic violation of law?
If they go after Intel then they need to go after Samsung as well and that's not going to happen in Korea. That would be like bringing the big three to court in the states only it happens to be the 'big one' in Korea.
To a previous poster who mentioned fines... Well gee, wouldn't you like to see (foreign) governments lining their pockets with these rulings?
Like it'll actually do anyone any good, except those governments and their coffers, of course!
Fine, fine, fine away...
I guess some people here have gripes against Samsung and like to air them on any occasion. (Intel employees, perhaps?)
Samsung did the same thing Dell did, and as I recall the only way Dell got in hot water was because they didn't report the extent of the Intel bribe to their shareholders (and how they would have a corresponding loss of income when they discontinued the bribe from Intel).
As for the poster who decided it was "cool" to correct my spelling, I'll admit I make the occasional mistake. But I spelled cojones correctly, which is to say I meant "bollocks." Cajones is also a Spanish word, but it means "drawers" (furniture item).
And to another poster, yes, I would like to see a truly HUGE fine against Intel, because big American businesses will walk all over Europe if the courts let them. It's just the way that game is played.
Shurely Intel execs should be facing life sentences for this global theft of billions from so many people.
Prison is for people who steal less than $100 000.
If you steal more, you are just an overzealous executive who has already suffered enough from the negative publicity.
If you do it using your corporation, you are never named or shamed at all!
If you steal a carton of cigarettes, then we can talk prison...
You're so mistaken I don't know where to begin.
First, EU fines Europeans as well. See this list: http://www.guardian.co.uk/business/2008/feb/27/microsoft.europe2
The only american company I recognize is MS... fined by the States too.
Second, "cajones" means "drawers" and "cojones" means "balls". I don't know if it's cool to have drawers to do something...
But don't let reality ruin your magic kingdom
Its funny how most of you just ignore the fact that this is a "translation" of a report from a firm that was paided by AMD. hummm??
"The KFTC opinion does not reflect the reality of the market or what happened. We'll prove that in court" said Mulloy, adding that it was hardly surprising the AAI was siding with AMD as the firm was a paid member and in no way objective.
There are so many holes in this report that just dont make any sense. Bottom line whether or not the consumer was hurt. Thats not clear from the evidence report in this report. Sure AMD was unable to complete, but thats not really what is at stake here. What really matters is if the consumer was hurt by having to pay inflated prices for CPU's. That will be uphill battle as cuz most of you know CPU prices have actually been dropping on avg over the years.
Not saying right or wrong here but, I think I will wait until the matter comes to cort before I make any judgements.