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Intel in Antitrust Trouble in Japan

Posted by samzenpus on Thu Mar 10, 2005 06:00 AM
from the big-and-illegal dept.
Intel Government The Courts News
vincecate writes "The Japan Fair Trade Commission has ruled that Intel violated antitrust laws in Japan. Giving customers discounts based on the volume of your products they purchased is good business. However, Intel was adjusting customer discounts based on the volume of competing products they purchased, which is not legal. After the ruling, AMD responded saying, "We encourage governments around the globe to ensure that their markets are not being harmed as well". While Intel responded saying, "Intel continues to believe its business practices are both fair and lawful."
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  • So carrots are legal, sticks are not (Score:5, Interesting)

    by grandmofftarkin (49366) * <3b16-ihd3@xemaps.com> on Thursday March 10 2005, @06:01AM (#11898103)
    In summary it looks like there is no problem encouraging people to use your product, it is only wrong if you threaten them when they consider using another companies product. Yes, this sounds pretty reasonable to me.

    I know very little about law in this area. Is it the same in the U.S. and Europe? I would like to think it is but then considering today's climate I wouldn't be surprised if you it wasn't!

    Oh regarding Intel's comment that it "... continues to believe its business practices are both fair and lawful.". It might just be legal in some countries but how is it fair to use your dominant position to prevent other companies from being able to compete with you? A statement like that is just a bare faced lie. If the situation was reversed you can bet Intel would kick up a fuss. I'm not saying I'm surprised it is just irritating.

    • Re:So carrots are legal, sticks are not (Score:5, Insightful)

      by Anonymous Coward on Thursday March 10 2005, @06:15AM (#11898134)
      Oh regarding Intel's comment that it "... continues to believe its business practices are both fair and lawful.". It might just be legal in some countries but how is it fair to use your dominant position to prevent other companies from being able to compete with you?

      Statements like this are not meant to be factual. They are meant to influence opinions. "continues to believe" is a phrase that should warn you that a politician or a company is lying to you. Always replace it with "persists in claiming".
    • it is only wrong if you threaten them when they consider using another companies product

      Of course, Intel did not actually threaten to initiate force against their customers (theft, fraud, extortion, murder, rape, etc). If they had, there would be no debate over the ruling. Intel only "threatened" to stop engaging in voluntary trade with their customers! Can you not see the difference here? Or were you deliberately trying to present the case as an actual threat of force?

      The fact is that Intel's customers

      • Re:So carrots are legal, sticks are not (Score:4, Insightful)

        by jackb_guppy (204733) on Thursday March 10 2005, @07:09AM (#11898277)
        You are using Voluntary very loosely.

        Intel when up from 78% to 89% of the market.

        Now the bases is same as Microsoft did to PC here in the US; "If you sell the others products, we will NOT give you money".

        What is large market share in your business, if you sell another's products, you loose money that makes you profitable.

        That is MOB (as in the market) talking.

      • Re:So carrots are legal, sticks are not (Score:4, Insightful)

        by Qzukk (229616) on Thursday March 10 2005, @08:35AM (#11898320) Journal
        I can and have "threatened" to quit doing business with online stores who tried to sell me damaged computer parts. Should I be charged with antitrust violations? Why or why not?

        Of course not, A) damaged goods are not an acceptable good and B) You're the buyer, you can do what you want anyway.

        Now lets say you go to the computer store and the manager says "You own an AMD, so that video card in your hand will cost double" would you call that a fair trade practice? If they're the only computer store in the country?

                  • Let's take a hypothetical poll. Can you actually sit there and claim, with a straight face, that there could be any less than a 99.99999% majority who agree with this:

                    I try to avoid answering such questions, since any numbers I could come up would be pure guesses, and guesses aren't valid arguments. Nor do I think it's my place to speak for people I've never even heard of.

                    No human being has the right -- under any circumstances -- to initiate force against another human being, nor to threaten

                    Realis

      • Re:So carrots are legal, sticks are not (Score:4, Insightful)

        by bechthros (714240) on Thursday March 10 2005, @09:26AM (#11898664) Homepage Journal
        Economic coercion is still coercion. If Intel made better chips, they wouldn't need to cut off the competition's balls. If economic coercion becomes accepted as standard business practice, it will be VERY detrimental to marketplace competition (which is to say, competition based on the merit of the actual product and not consumer loyalty) and therefore VERY detrimental to real Capitalism.

        Film at 11. [maxbarry.com]
      • Of course, Intel did not actually threaten to initiate force against their customers (theft, fraud, extortion, murder, rape, etc). If they had, there would be no debate over the ruling. Intel only "threatened" to stop engaging in voluntary trade with their customers! Can you not see the difference here? Or were you deliberately trying to present the case as an actual threat of force? The fact is that Intel's customers voluntarily chose to do business with Intel, and they can voluntarily choose to end that

  • What!? (Score:5, Funny)

    by kunwon1 (795332) <dave.j.moore@gmail.com> on Thursday March 10 2005, @06:01AM (#11898105) Homepage
    Intel? Antitrust!? I don't believe it! I'd sooner believe that Linus Torvalds switched to a new OS!
    • lol, I wouldn't. You say that as if Linus doesn't still use linux.

      Sheesh - I don't even know why that even got reported - Linus got a computer for free and he's actually using linux on it!

  • Hey Intel... (Score:3, Interesting)

    by BackInIraq (862952) on Thursday March 10 2005, @06:04AM (#11898107)
    ...see that fine line between shrewd business practices and predatory, monopolistic racketeering?

    See how you and Microsoft are on the same side of it?

    That's a bad thing.

    • Re:Hey Intel... (Score:4, Insightful)

      by Bralkein (685733) <jack,hollingworth&ntlworld,com> on Thursday March 10 2005, @06:42AM (#11898226)
      Are you really surprised? Intel and all large corporations exist to make their organisation more valuable. They all push the law just as far as they think they can get away with... but this time, they judged wrong. I'd love to know about all of the dodgy shit that even fairly reputable organisations get up to, because I suspect there's an awful lot more of this stuff going on than your average person knows about.

      I always think of it like this: they're not immoral, they're amoral. They just don't care about right or wrong, they can't afford to, because that's how the system works. I'm glad that they got caught, and I think we need much more government constraints put in place and have them actively enforced to prevent things like this from happening.

      Of course, for that to happen, I'd need to buy myself a politician or two... and I'm only a poor student... care to give me a donation anyone? ;)

  • Standard PR response (Score:5, Insightful)

    by Anonymous Coward on Thursday March 10 2005, @06:07AM (#11898113)
    While Intel responded saying, "Intel continues to believe its business practices are both fair and lawful."

    That's how PR hacks are taught to respond. When, for example, your CEO is stealing money, your PRish role is to go out and with a straight face say: "The core Value of our company is Honesty. We will introduce a Business Codex to emphasize our commitment."
  • Computer manufacturers are already being sued in anti-trust cases...in Ja- oh, never mind
  • but then again, if Intel wants to do business in Japan, I guess they should also abide by the rules. I'm sure AMD are happy.

  • Woo! (Score:5, Funny)

    by Anonymous Coward on Thursday March 10 2005, @06:11AM (#11898125)

    Does this mean that we get to start referring to Intel as a "convicted monopolist" in every /. article about the company, just like we do for Micro$oft??

    That's awesome!

  • Intel in Antitrust trouble... in Japan! (Score:3, Funny)

    by Anonymous Coward on Thursday March 10 2005, @06:15AM (#11898136)
    Intel in Antitrust trouble... in Japan!

    The meme works.
  • Clearly, Intel has been trying to take advantage of the weak dollar to expand its market in Japan, and the ever-watchful Japanese regulatory agencies moved to stymie foreign intrusion into one of their most tightly protected markets [clari.net].

    Looks to me like this could be the opening salvo of a new trade war. I just hope it doesn't affect the price of ramen.

  • Last sentence was edited out by slashdot editors (Score:5, Interesting)

    by vincecate (741268) on Thursday March 10 2005, @06:24AM (#11898179) Journal
    But if Intel really believes this is "fair and lawful", why is it that Intel does not use written contracts for these deals? [asahi.com]

  • IANAL, but I thought that to be in a antithrust situation, you had to be barring others from market, and also have a significant market share (i.e more than 80%)

    In the case of Intel, the consumer has a real choice, in AMD for home pc's, and POWER or AMD for servers. So as long as there is a real choice, there is competition, and IMO, there is very hard competition between Intel and AMD. So I think it's strange that Japan focuses those over Microsoft or other monopoles that is less challenged.

  • What's missing the from Intel statement (Score:5, Insightful)

    by Laurentiu (830504) on Thursday March 10 2005, @06:30AM (#11898196)
    "Intel continues to believe its business practices are both fair and lawful ,in spite of all evidence to the contrary."

    If they keep on going like that, pretty soon we'll have Intel turn into a religion.
  • On the whole this does seem like a rather gross abuse of Intel, a company I have previously supported, well not so much supported but remained indifferent towards. However this pricing scheme seems rather off, not just in fairness, but how in the world would they be aware of the volume of a competing product that a company has purchased? Perhaps there's something simple I'm missing (more than likely) but I don't see any realistic reason why Intel would know extensive information about such things, though I'
  • Intel continues to believe its business practices are both fair and lawful.

    And I believe my actions are both fair and lawful... Now, to go rob that bank...

  • I'll give you an example... (Score:5, Funny)

    by jpiggot (800494) on Thursday March 10 2005, @06:46AM (#11898236)
    Some people seem to be confused; let me help to explain. If I liked listening to "Pennywise" and bought all their CD's, and Ashley Simpson found out about it and charged me EXTRA to purchase her limited edition concert DVD with bonus interviews, AND if we both lived in Japan...I'd legally be allowed to force her to commit suicide in the town square. With a kitchen knife.

    It's a rich and vibrant culture those Japanese have, I tell you.

  • Dell and AMD (Score:4, Interesting)

    by Anonymous Coward on Thursday March 10 2005, @06:55AM (#11898255)
    Could it be for a similar reason that Dell reinstated that they will stick to Intel chips despite the lead of AMD in 64 bit processors.

    I mean the Intel CEO called Dell's CEO and said: "If you offer a single system with AMD processors we'll raise the prices on our stuff". Of course both will deny.

    I strongly suspect something like this: in big business relationships, you can never be paranoid enough. The reality is much worse than anything that most people could start to imagine.

    For example, AMD has been the only source for mobile 64 bit processors for quite some time. But Intel can prevent Dell from entering the market until they are ready, and maybe also pressuring Microsoft in the same direction, so that both Dell 64 bit portables and 64 bit Windows will be available only when Intel has all 3 catergories (mobile, desktop and servers) covered.

    • This is just priceless:

      U.S.-based AMD Not Seeking Orders From PC Seller Dell
      Dow Jones Equity News, Thursday, March 10, 2005 at 00:17

      TAIPEI (Dow Jones)--U.S.-based Advanced Micro Devices Inc. (AMD) has no plans to supply chips to Dell Inc. (DELL) in the foreseeable future, despite Dell's No.1 position in the global personal computer business."Our plans to successfully grow market share and improve our finances are actually based on not doing business with Dell. We're not going to give away product just t
  • Intel's actions would be like Microsoft selling you the install CD's which scan you computer for linux. If it finds Linux you would have to enter a 'special' serial number that would of course cost you more than the 'standard' serial you purchased with the install disks.

  • Intel continues to believe... (Score:4, Funny)

    by bani (467531) on Thursday March 10 2005, @08:45AM (#11898362)
    ...that the itanium is a wildly successful product, too.

    in other news, intel continues to believe the f00f and pentium fdiv bugs were really just user error...

  • Replace REBATE with BRIBE (Score:3, Insightful)

    by lcsjk (143581) on Thursday March 10 2005, @09:26AM (#11898663)
    Consider this, "If you buy 100,000 of our product your price will be $1,000,000 for the lot. However if you agree to buy fewer or none of the competing AMD product, we will sell you the lot for $900,000."

    Companies set their real prices based on the manufacturing cost of the product and the profit they must make on each to stay in business. Their sell price is NOT supposed to be based on whether the the buyer is also obtaining products from a competitor. Giving rebates or discounts based no that principle is similar to a bribe, and is illegal nearly everywhere [unless you are receiving the bribe ;) ].

  • Counter Justice (Score:3, Interesting)

    by Doc Ruby (173196) on Thursday March 10 2005, @09:38AM (#11898778) Homepage Journal
    A corporation breaks the law, is found liable, and is forced to pay damages. It complies, but it makes public statements that "we did no wrong". It is therefore claiming it is complying solely due to government blackmail, intimidation: "we're complying because otherwise we might get shut down, or maybe be put in a government cage". Justice is dismised as irrelevant. People have the right to criticized the government, to disagree with it. But where does a corporation's "right" to "free speech" end, and sedition, work to undermine the government and its authority, begin? Corporations already get to use the government judicial system, subsidized by taxpayers, to do much of their most difficult negotiation work. And usually settle before judgement, cheating the public of any benefit from a precedent in the settlement. Why do we allow them to use and abuse our expensive justice system - and work steadily to diminish it, in favor of a power vacuum into which corporate power can easily move?

    • Re:Give me a rational reason why this is a problem (Score:5, Insightful)

      by dhbiker (863466) on Thursday March 10 2005, @06:12AM (#11898126) Homepage
      I think you missed the point slightly, it goes something like this:

      Intel: "if you buy 1 chip it costs $500"
      Intel: "But if you buy 10 it costs $450 per chip"
      Intel: "If company X wants to buy 10 then it will cost them $480 per chip because we found out they bought an athlon chip last week"

      THAT is not on!!

    • Re:Give me a rational reason why this is a problem (Score:5, Informative)

      by BackInIraq (862952) on Thursday March 10 2005, @06:16AM (#11898142)
      Can someone tell me honestly what's wrong here? Intel are the ones who have control over their product. They get to sell their products and define how much it sells for. Why are governments getting involved?

      Obviously if a company is buying more of a competitor's products then they're buying less of yours, so your own are more expensive to them because they are buying in lower quantities. that is simple grade school economics."

      The problem arises when somebody tries to use their position as the established leader to keep other companies from establishing a marketshare, thus using their dominance to maintain a monopoly. Not as much of a problem with Intel as it would be with a company like Microsoft (as AMD is a very strong competitor), but still not a good idea to let bad practices get started.

      Again, basing your prices off how many of YOUR chips they buy is okay. What this alleges is taht they are also factoring in how many of the competitor's chips they buy, which is not. How many AMD chips a company buys is none of Intel's business, and shouldn't affect prices.

      Simple example. Company A makes 100,000 computers, and uses Intel for 50,000 and AMD for 50,000. They should be charged the exact same rate as Company B, which makes only 50,000 computers but uses Intel for all of them. The accusation is that Intel would instead charge Company B a lower rate, because while they purchase the same volume they don't purchase any from AMD.

      As somebody else said, the carrot is legal, the stick is not.

      • Simple example. Company A makes 100,000 computers, and uses Intel for 50,000 and AMD for 50,000. They should be charged the exact same rate as Company B, which makes only 50,000 computers but uses Intel for all of them.

        Close but no. Intel shouldnt charge Company A the same as Company B for the same 50,000 units. Intel *should* charge Company A the same for those 50,000 units as they would if they didnt know about the 50,000 AMD units. Bit of a difference.

        Intel is well within its rights to charge Co

      • Re:Give me a rational reason why this is a problem (Score:4, Interesting)

        by orlinius (181137) on Thursday March 10 2005, @08:58AM (#11898457) Homepage
        I'm not surprised at all that Intel has such practices with its customers.

        Two years ago, in the company I worked for, we needed to buy 600 cheap servers from Dell for an embedded application that we had to install at our clients. The price was really very important. If we couldn't get them at the right price, our project was not going to make it.

        Dell did everything to lower the price. I remember they went down as much as 50% but it was still not enough.

        We were about to cut the project when Dell called us and told us that the only way to reduce the price of the 600 servers further was if we signed some sort of paper saying that we used AMD processors in our previous project and this was a replacement project. This way they could get a big rebate from Intel under a certain program provided by Intel.

        I just couldn't believe that Intel was ready to go that far...
    • Dear God, could you at least skim the F article before posting?

      They gave their customers lower prices if they guaranteed not to buy their rival's chips. To my mind, that is unfair.

      Justin.

    • Obviously if a company is buying more of a competitor's products then they're buying less of yours

      Okay, I'll try explaining this in easier terms.

      Intel to customer: "If you buy 1 of these, it will cost you 100$, if you buy 10, you will get them for 50$ each".

      So far, it's fair enough.

      Intel to customer: "However, for each product you buy from AMD we will lower our discount. Buy one single item, and our product will cost you 60$, even if you buy 10 of them."
      Now, this is unfair, since the customer w

    • its easy: Intel Pentium 4 530 3.00GHz: 176 imagine you and me we are both retailers. i buy 1000 of them, get them for 100k . you buy exactly the same 1000 but get them for 150k . why? because you also sell amd stuff. still think everythings working right?

    • Bulls**t (Score:2, Insightful)

      by gomel (527311)
      The role of anti-trust legislation is the protection of consumer choice. Intel's discount was directly targeted to prevent an alternative.

      Monopolies are bad, irregardless of whether they are owned by the state or privately. People living under communism had no choice, too. All they had was one-two products from one state-owned monopoly.

      BTW, I assume that people are able to distinguish between cheese and CPUs on their own.
    • Obviously if a company is buying more of a competitor's products then they're buying less of yours, so your own are more expensive to them because they are buying in lower quantities.

      But, if you read the article, that is not what was happening.

      Rather, the scheme was that if I was buying 1,000,000 intel chips, and you were buying 1,000,000 intel chips plus 500,000 AMD chips, my intel chips would be cheaper. Ie it is not an issue of bulk discounts, but rather of bribes not to buy anything from AMD.

      Now,

        • Well, unless you are assuming perfect information[...]and that no company has market power

          No, that's the point, market power costs money to excercise (eg Intel has to pay people not to buy AMD, or keep it's prices below reasonable cost plu margin or whatever), so given a perfectly stable open market etc. etc. eventually the little guys who keep nipping at the monopolist's ankles will bring it down.

          Unfortunatly, in the real world, there are barriers to entry, especially international ones and the world c

    • "Obviously if a company is buying more of a competitor's products then they're buying less of yours, so your own are more expensive to them because they are buying in lower quantities. that is simple grade school economics."

      Volume discounts are fine. The problem occurs not when you say "Buy more than 5,000 of my widgets and you get a discount. Buy less and you don't." The problem is when you say "If the number of my widgets in your shop drops below %80 of your total I will cancel the discount." Attempt

    • Re:Give me a rational reason why this is a problem (Score:4, Insightful)

      by meburke (736645) on Thursday March 10 2005, @09:23AM (#11898644)
      It's a problem because it's an American company doing business in Japan. Japanese companies do it all the time in foreign countries. NEC especially carved a niche by matching competitive prices (in the form of discounts and rebates) against IBM among large businesses that had a large number of IBM PC's. Once a big company like AMOCO started buying NEC desktops, they moved on to printers, etc. The program where they would give a rebate or discount when a customer traded in a competitive PC was effective for a while in the late '90's.

      Of course, this wouldn't happen in Japan. Japanese keiretsu have pretty well divided up the Japanese business market satifactorily. Trying to skate a Japanese business away from an established vendor is considered socially deplorable. It's done, but very subtly, so it doesn't look like the computer company is establishing inroads in the competitor's market. In the US, their "cooperation" would be considered "collusion" and "price fixing".

      Wanna read a cool book? "The Asian Mind Game" by Chin-Ning Chu explains a lot about the roots of Asian competitiveness and difference in ethical guidelines vis a vis The US and other occidental cultures. It will change the way you view Asian politics and business.

      This attack on Intel may not even be aimed at Intel as much as laying the groundwork for an attack on Apple (which is actually doing OK against Sony in Japan) or the introduction of a Fujitsu replacement for the Intel chips a couple of years from now.
    • There's no problem for anyone with offering cheaper prices for people who buy larger quantities of your own product (as long as you're allowing anyone who buys in those quantities to get those prices, of course). But that's nothing to do with the case reported. Offering cheaper prices to people who buy larger quantities of a competing product is wrong.

    • we do live in a world where if you pick up a catalog to order things, there's a price for 1-25, a price for 25-50 and a price for 100+, the more you buy the cheeper you get what you want.

      More to the point, we don't live in a world where one usually sees the price depend on how few of the competitor's product you bought instead of how many you bought from them.

      For what it's worth, there have been rare occasions when buying more of an item might lead to higher per unit prices.

      One example involved Sony whe

    • "but we do live in a world where if you pick up a catalog to order things, there's a price for 1-25, a price for 25-50 and a price for 100+, the more you buy the cheeper you get what you want."

      Yes, discounts for quantity happen, and are legal ... but what if the owners of Catalog "A" charged you more for your 100 widgets than they charged me for the 100 I bought, just because you also bought widgets from Catalog "B". That is not only unfair pricing, it is an attack on "B".

      Japan has no problem with the

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