EETimes.com – EC charges Intel with anticompetitive practices — oops! The question this begs is where were the USA regulators? If this sort of thing was happening in Europe it was happening here too. Apparently we have no real antitrust mechanism that actually does anything. With that in mind why doesn’t Intel simply buy out AMD and end this agony?
EC antitrust regulators have concluded that Intel has abused its dominant position in the microprocessor market. The legal proceeding could end with a billion-euro fine for Intel, media reports here speculate.
In a statement of objections issued friday (July 27), the EU antitrust authority blames Intel of having infringed the EC antitrust rules in that the microprocessor giant had used practices aiming at excluding AMD as its main rival from the x86 market.
In its statement, the regulator accuses Intel of three types of abusing a dominant market position: First, Intel had provided ‘substantial rebates’ to several OEMs under the condition that they buy their microprocessors exclusively from Intel. Secondly, Intel paid to OEMs if they delayed or canceled the roll-out of products based on AMD CPUs. Thirdly, Intel has offered microprocessors to server OEMs under cost in order to block the competitor.
Of course we have no antitrust mechanism.
People’s Exhibit A: Microsoft Office.
EU anti-trust laws make any economist shiver. Never mind the fact that the already existing labour mobility laws in some Western EU countries are contradictory to the Article 85 in the Treaty of Maastricht. The only justifiable case for an efficient anti-trust law pertains to a government protected or supported producer.
Their rationale:
“First, Intel had provided ‘substantial rebates’ to several OEMs under the condition that they buy their microprocessors exclusively from Intel.”
Not rebates! In most economic areas buying in bulk generates a decrease in marginal cost for the additional “x” unit bought. The consumer gains from the decreased cost, INTC gains from increased market share, and the intermediate producers gains from the positive shift in profit margins or the trade off between profit and quantity shipped. The loser is clearly the competitor AMD, however this loss is not the result of some exogenous, uncontrollable market force, but instead INTC having a more competitive product at a lower cost.
“Secondly, Intel paid to OEMs if they delayed or cancelled the roll-out of products based on AMD CPUs.”
Aside from that being a poorly constructed sentence, the logical goal should have been that AMD establishes contracts between the OEMs, a contract that agrees to sell AMD based computers at a price of P* for t amount of time. Such arguments as “AMD is the underdog,” “AMD can not leverage the market to pass those contracts,” or “INTC has more capital liquidity to win any price war (that being the most plausible and rational)” all fail to persuade any student of the market. Last time I checked similar deals between INTC & Dell were common place, but when I go to Dell’s website I can buy an AMD PC! Where’s the Cripes on that one? Any winner in a CPU price war will be the input buyer and the consumer; playing one CPU maker off another one only serves the interest of the consumer and the intermediate buyer. This is exactly why now is a good time to get in to consumer cyclical, PC makers as input price wars continue to progress.
“Thirdly, Intel has offered microprocessors to server OEMs under cost in order to block the competitor.” As consumers should we not be thanking INTC for such altruistic practices? The reason INTC is able to do this is because AMD dropped the ball about a year ago, after making tremendous inroads in the consumer CPU markets. This fails to meet the criteria under Article 85, “effect the prevention, restriction or distortion of competition within the common market,” because INTC’s ability to offer such discounts pertains to the company’s more competitive product, a result of competitive market practices.
Give me a break EC.
For point 3, Pricing for less then your competitor is bad now?
Well, we can certainly see all the good and wonderful things the EU’s decision against microsoft has brought the consumer. We can now choose from the plethora of new products spawned by this legislation.
I wait with baited breath for all the new, wonderful, and innovative CPU products that will arise from this brave attempt at finemaking.
ehhh… while I wait, I better call my vendor and go ahead and order a few more quad core servers…..
2-3==The cpu’s were offered “under cost.” This is classical anti-competitive activity. Consumer benefits until viable competitors go bankrupt or are bought out. Then the sole remaining supplier jacks up the cost to recover their earlier investment + all they can scam.
If true ((one of the easier violations to “prove”)), GOUSA should be ((but isnit!!)) ashamed not to have blown its own whistle. Could say the same about food products from China==I sure hope the EU continues to enforce the marketplace for “all” our benefit.
#2 “Last time I checked similar deals between INTC & Dell were common place, but when I go to Dell’s website I can buy an AMD PC! ”
Not only that I went to buy a couple of low end machines for the office from Dell the other day and it took me several minutes to find one that DIDN’T have an AMD processor.
Doing what the EU is doing here doesn’t help the consumer.
Wow. Isn’t this the same EU that wants to investigate Apple for anti-trust because iTunes/iPod is so successful and they don’t integrate with other mp3 players? Let’s just say they’re anti-trust happy against American companies that are more successful then their home grown rubbish.
Corporations push their luck all they can, government is supposed to push back to counter that. In North America there’s this stupid idea that government should be business’s buddy. Sure government can do some dumb things but at the end of day having a country means the government is in charge.
Intel doesn’t buy AMD because of the same reason M$ doesn’t buy Apple. I don’t know what reason but there must be one.
Angel H. Wong: The strategy is to keep a crippled competitor around so as to deflect monopoly concerns. Don’t forget when Apple was going broke M$ bailed them out. Does M$, indirectly of course, still own a big chunk of Apple? Of course they do.
The Mac head flames should start any time.
Bobbo, generally such arguments work in theory, but in practive the company can’t recoup it’s original losses. Any jack up of prices encourages too many competitors.
My goodness… maybe we can start seeing those chinese processors that cost close to dirt and have a hell of a time to enter the market…maybe after this the EU can protects those too…
Aha there was a link after all:
http://www.infoworld.com/article/05/10/18/HNintellaudschina_1.html
#2, mxpwr03,
Thank you so much for the Milton Friedman Inspired Economics Screwball Lecture. This is the classic example of why neo-con thinking is failing to help national economies while making the rich even richer.
The EU is right to go after a company using its size to injure a smaller company.
Oh, by the way, Dell got out of its exclusive use of Intel chips so as to avoid this very issue. Dell management doesn’t see the incentive to waste a lot of money on lawyers and litigation when the money saved through Intel is relatively small. Sometimes it is cheaper to obey the law then it is to try to skirt it.
Has anyone READ the history…
MS backs Linux and MAC…
MS backs AMD…
WHY??
BECAUSE,
INTEL and MS, need a competitor, so they CANT BE SUE’D….
If there is no competition, MS and INTEL can be sue’d to the ground.
MS trade’s sides as they NEED, to keep the competition ALIVE.
The scary part to me was that if the EU didn’t take this action then they were under threat of legal action. That is way crazy…the government should be encourage to do nothing where ever they are.
#17, Kvolk
the government should be encourage to do nothing where ever they are. (I assume you meant encouraged)
Wrong. The government should always be encouraged to act in the best interests of society. When a company exerts monopoly power to injure another company, then it is NOT in the best interests of society to allow that to happen.
To have government just sit there when the people are being injured is silly. Neo-cons are among the first to want a military to protect us from other countries and a strong police force to protect us from societies miscreants. So why do they think we don’t need protection from any company be large or small, that aims to damage society.
NOTE: those who don’t understand the danger of monopolies, cartels, and oligarchies should read a little history of how well they managed the economy from 1870 through to 1933.
Yes, the right-wing so-called “free market” advocates, who preach on the hallowed American myth of success being the consequence of offering a better product or a better value to the consumer, are the first ones to pop up with bogus, overintellectualized rationalizations for dirty, underhanded, unethical, immoral anticompetitive and anticonsumer practices. Yet another time-honored Repuglican way for the moneyed few to bleed the masses dry, with amoral slime lawyers in the featured roles, as always. Ya.
As Apple continues it’s long-overdue growth in sales and profitability, they’d do well to buy up AMD.
#19: Apple is using only Intel processors right now. Others can have opinions about the reasons why.
Mr F…so you don’t seen any problem with the government being compelled to act? Not because there is good reason or even maybe evidence just they have to act no matter what. Remember these are the people that define a white elephant as a mouse buildt to government specs. This kind of thinking is way more scary then any conspiracy theory about orwellian government coming into play in our future.
Mr F
NOTE-knee jerk reactions begat an unexpected pain in the fundament.
#22 & 23, KV,
Neither of your posts show any sense.
…so you don’t seen any problem with the government being compelled to act?
Yes. We expect our government to react. When a hurricane devastates a large city or a flood wipes out a town, WE expect to see our government step up and assist. See, FEMA and the National Guard.
When life is so complicated that laypeople can’t understand the specifics, we expect the government to hire experts on our behalf to protect us. See, FDA, EPA, FCC, SEC, FTC, and any number of acronyms.
When the technology is above our heads, we expect the government to set the rules to protect us. See, FAA, NHTSA, DoE, DoA, etc.
When a company tilts the market through unfair, and usually illegal, methods, then we expect our government to act. Monopolies are NOT beneficial to the economy or the nation. Competition spurs innovation. Competition keeps prices lower. Competition gives consumers better, safer, and higher quality products. Monopolies have no incentive to improve or satisfy the captive consumer. It is best for the nation to have a healthy market place.
Remember these are the people that define a white elephant as a mouse buildt to government specs
I have no idea what the hell this means. I have no recollection of ANY government specification that would stipulate what a mouse should look like. Is it sarcasm? Is it stupidity on your part? Would it be you just don’t understand what government specs really are? Maybe you were just trying to be cute when it is obvious you don’t have a clue what you are posting.