Intel's EU antitrust ruling is due tomorrow
THE QUESTION du jour in the EU appears to be "Can a company be too big to be regulated?"
It's a question that both Intel and Microsoft are praying the answer to is "Oui", but the likely reality is that Brussels will deliver a short, sharp "Non" tomorrow morning, when it is expected to rule on its antitrust inquiry into Intel's alleged anticompetitive behaviour in the European market.
If the European Commission finds Intel guilty of offering rebates and 'other inducements', that is, bribes, to OEMs in attempts to suppress competitors' market shares or freeze them out of some channels in the EU market altogether, it could fine Intel up to 10 percent of its annual revenue, which amounted to some $37.6 billion in 2008. That would be a serious punch in the gut rather than a gentle slap on the wrist for the world's dominant chipmaker.
So, what happens next if Intel wakes up to its worst nightmare tomorrow? Well, for a start, Chipzilla "will definitely appeal" according to Jim McGregor, a chief technology strategist at In-Stat. After all, he told the INQ, "lawyers have to justify their jobs."
But will an appeal even make a difference? McGregor says he's doubtful, and moreover, predicts a guilty verdict could "lead to class-action suits in Europe."
However, a long drawn out appeal process would at least delay the payment due date of any penalty that might be assessed, of course, which in itself might be reason enough for Intel to appeal given the massive amount of money that could be involved.
The INQ also posited to McGregor that the European Commission might be the least of Intel's troubles, what with the Obama administration reportedly set to take a tougher stance on antitrust complaints, even possibly by going after firms that the Bush regime left alone or actively protected during the reign of his corporatocracy.
But according to McGregor, "the US is a completely different animal," with the FTC not having taken a proper stand against big business "since they blew the case against Microsoft."
(Not wanting to argue, we didn't point out that the US Department of Justice actually won the Microsoft antitrust case under Clinton, but the Bush administration threw out Judge Jackson's proposed remedies that might have broken up Microsoft and settled the case instead, on such lenient terms that one almost wondered why it didn't also offer the company an apology for having inconvenienced it.)
"The new administration has promised to change that, but it is difficult to determine what, if anything will happen, especially to two technology leaders that are critical to the competitiveness of the US," explained McGregor.
True, but we've seen the recent grumbles from the US Department of Justice regarding companies like Google, which seems to be finding itself increasingly in the antitrust spotlight of late. So, will Google be next on the EU's list?
"There is speculation that Google could be subject to some scrutiny," said McGregor, adding that if the EU feels harm is being done to the market or consumers themselves, Google "could be next."
A guilty verdict for Intel would also "lend additional credibility" to third parties like AMD that might be looking to file civil lawsuits against the firm, said McGregor, adding, "AMD could potentially file suit in the EU for specifics, as they did in Japan."
Also, it should be noted that, although the US stayed out of the European probe, last year the FTC did start a formal investigation into Intel's sales practices within the US. So win or lose tomorrow in the EU, Chipzilla certainly will have no cause to believe it is home and dry. µ
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I just wanna know, since when is it wrong to offer incentives? Bribe is a dirty word being used to charactarize what is a common practice as long as your company isn't that big..
Jason, you misunderstand. Incentives are fine - everyone does it - "we'll drop the price if you carry more of our product" or "we'll throw you some marketing budget".
However, saying "if you start to use or stock the competitors products, we'll cancel our agreement" - that is anti-competitive.
Other things include "you can't put more than x-many/%age of a competitors product on show, otherwise you lose marketing budget" rather than "to qualify for marketing budget, you must show x-many products and cover this-this-and-this".
There is a clear difference.
How about if you pressure web sites to just put your ads up and write positive reviews for your product and not the competitors?
There seems to be plenty of that about.
Though not here as the Inq crew itch to bag any company ... which is refreshing ... lol.
Nice loaded question about US enforcement given the speech given yesterday by Christine A. Varney who is the new chief of the Antitrust Division announcing withdrawal of Bush era guidelines under Section 2 of the Sherman Act. You caught him talking without knowing what he is talking about. It is no longer DOJ policy to roll over and play dead. Christine lead the charge in the Microsoft Internet Explorer case. I am sure her appointment makes Steve Ballmer feel all warm and fuzzy inside.
Reynod the answer is in 18 USC 1952 (Travel Act) where it is illegal to travel to bribe some one. So if any Intel employee meets with a website concerning payments for "favorable" treatment then Intel is toast. Emails and wire transfers would be covered under wire fraud 18 USC 1343 and letters by post or checks in the mail are covered by 18 USC 1341.
Just curious, at what point are the 'evil' European distributors who accepted the 'bribes', and colluded with Intel, subject to any EU actions? Are they allowed to keep the bribe money? Are they allowed to benefit from someone else's 'illegal' behavior? Is what they did legal... they did agree to freeze AMD out in exchange for the rebates, right? Please don't tell me they had no choice in the matter.
Again, the EU is missing the point - it takes 2 parties for what they claim to have occurred to happen - yet only the one with deep pockets is the target? Say what you want, but this is as much, if not more, about a money grab then fixing things otherwise the EU companies participating in all this would be subject to sanctions as well so it is clear that they cannot just plead ignorance and take 'bribe' money.
Interesting how it's just assumed that intel did these things. Have product prices stagnated, has innovation ceased? Is there any proof at all that Intel has tried to exclude competition or 'punished' suppliers for stocking AMD? I've not seen any of these signs of anti-competitive behaviour.
Is a company anti-competitive because they have a large market share? Is that now the definition of anti-competitiveness, or is that just the definition of competence?
What do i know, i'm not a lawyer or a journalist.
My company was for a few years an Intel Channel Integrator (before I switch to serveices/software only). I never was in big business, and the decision to sell PC was based on a specific limited market (workstations for video editing, CAD), so I choose for peace of mind Intel (MB and CPU).
Nobody never told me that I only sell Intel CPU. I was at Intel Channel Conferences and many people are arguind to Intel about prices for CPU and compares to AMD.
Of course there was a small amount of rebates (like 10-15USD/CPU) but it never was related to sell only Intel CPU.
That was from what I saw. If Intel for big business put conditions for big rebates related to buy only Intel CPU and that rebates makes a big difference in real world, they must be punished. But in my case these rebates makes NO difference from companies that bought products on grey market (not from channel) or from big stores (my pruchase price was higher than sell price from a big store that sells also AMD CPU).
Intel is not stupid, it actually was the plan that the unwashed did not see anti-competitive behaviour from Intel. As it probably only played on a high-level and not on the level of the usual workers, so no one ever needed to notice, just the treats to the execs of the companies that wanted to sell Intel and AMD alongside.
The Impact for the customer is pretty clear if you see the current state of AMD. If AMD actually could make money when they had a superior product, they would have had some more reserves now.