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AMD digs the knife into Intel over EU fine |
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by Stan Beer
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Thursday, 14 May 2009 |
Number two
microprocessor player AMD is gleefully digging the knife into its much
larger rival Intel over the US$1.45 billion fine imposed by the
European Commission for antitrust activities. AMD, which has never had
much higher than 20% market share is playing the EC ruling for all its
worth, stating every single case where Intel is said to have abused its
dominant market position.
Ironically,
Intel, which has 80% of x86 processor marketshare, is the company that
invented the 8080 microprocessor, the direct ancestor of the x86
lineage. However, today it is AMD claiming the moral high ground after
the EC found that Intel used its deep pockets and market muscle to
unfairly keep its smaller Silicon Valley neighbour out of the market.
In
so doing, according to the EC, Intel has harmed millions of European
consumers by stifling competition and innovation and artificially
keeping the prices of microprocessors high.
"Today’s ruling is an important step toward establishing a truly
competitive market,"” said Dirk Meyer, AMD president and CEO.
"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.”"
“"After
an exhaustive investigation, the EU came to one conclusion – Intel
broke the law and consumers were hurt,”" said Tom McCoy, AMD executive
vice president for legal affairs.
"With this ruling, the
industry will benefit from an end to Intel’s (sic) monopoly-inflated
pricing and European consumers will enjoy greater choice, value and
innovation."”
The EC decision stated specifically that:
- •“Intel
gave wholly or partially hidden rebates to computer manufacturers on
condition that they bought all, or almost all, their x86 CPUs from
Intel”.
- •“Intel made payments to major retailer
Media Saturn Holding from October 2002 to December 2007 on condition
that it exclusively sold Intel-based PCs in all countries in which
Media Saturn Holding is active.“
- •Intel
“interfered directly in the relations between computer manufacturers
and AMD. Intel awarded computer manufacturers payments - unrelated to
any particular purchases from Intel - on condition that these computer
manufacturers postponed or cancelled the launch of specific AMD-based
products.”
AMD pointed out in a public statement that
Intel has so far failed to convince any antitrust enforcement agency
that its business practices are lawful and pro-consumer. The smaller
chip maker also pointed to other instances where Intel is said to have
abused its market position:
- In 2008, the Korea Fair Trade Commission (KFTC) issued a 26
billion won fine (approximately $25.4 million USD) saying that Intel’s
abuse of its dominant position included coercing and paying customers
millions of dollars on the condition that they use only Intel chips,
delay launches of AMD products, and/or not develop any new products
with AMD chips. The KFTC also found that, “South Korean consumers had
to buy PCs at higher prices as domestic PC makers were forced to buy
Intel’s pricier CPU.” In addition to a fine, the KFTC ordered Intel to
stop the practice of offering payments to PC makers conditioned upon
them not doing business with AMD. Intel is in the process of appealing
the ruling.
- In 2005, the Japan Fair Trade Commission (JFTC) ruled that Intel
had violated the country’s anti-monopoly laws by illegally forcing full
or partial exclusivity with five Japanese PC makers. Intel did not
appeal the ruling.
- In the United States, the U.S. Federal Trade Commission (FTC) and
New York Attorney General’s office are investigating Intel for abuse of
its monopoly position. In 2005, AMD filed private litigation in the US
District Court of Delaware, which is scheduled for trial in spring 2010.
The EC fine is hardly a knockout punch for Intel but it is certainly a
body blow. It's been a tough time for the PC industry and its suppliers
and an unplanned US$1.45 billion bill is something that not even Intel
can take lightly.
In a fairly forgettable 2008, the giant chip maker had revenues of
US$37.6 billion and net earnings of US$5.2 billion. Judging by the
first quarter of 2009 results, released last month, improvement on last
year's figures in 2009 seem unlikely.
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