EU Regulator Raids Intel Offices

stevedcc writes "BBC news is reporting that Intel's offices in Munich, Germany have been raided by European Union competition regulators. From the article: 'The Reuters news agency reported that the Commission also raided computer retailers on Tuesday including Germany's Media Markt, which sells PCs with Intel central processing units but not those made by AMD. Regulators have the power to fine Intel up to 10% of annual turnover if they find it guilty of stifling competition. Intel has said it is "confident" it had acted lawfully.'"

The line forms to the right

[erick99 (743982)]

"Intel has been accused of trying to abuse its dominant market position by selling its products below cost price and making cash payments to customers".

Where do I get in line for this?

Re:The line forms to the right

[snowraver1 (1052510)]

You don't really want it. Competition would be way better in the long run. Competition keep prices down and innovation moving. If you really want to help the industry, buy AMD so that next time you are building a computer, you will still have the option to choose the CPU.

Re:

[beckerist (985855)]

If they are selling at below cost, doesn't that mean that competition is working?

Re:The line forms to the right

[eln (21727)]

Sure, it means that competition is present at the moment, but it also means they're attempting to eliminate the competition. A larger company will sell below cost because they know a smaller company will go bankrupt trying to compete on price well before they will. If this sort of thing goes unchecked, the larger company will jack up its prices after the competition is eliminated, and the end result will be no choice and high prices for consumers.

Re:The line forms to the right

[Hognoxious (631665)]

So... you'd prefer a monopoly with a vested interest to do it?

Re:

[everphilski (877346)]

I prefer the market to bear itself out, yes.

And saying Intel is a monopoly, at this point, is laughable. Unfair practices? Perhaps. We will find out. But they aren't a monopoly yet.

Re:The line forms to the right

[s_p_oneil (795792)]

No, it doesn't. It means that AMD is down and Intel is going in for the kill. If AMD is killed, competition in that market will be completely dead. CPU prices will soar, Intel won't need to spend so much on research, and everyone else will be so far behind Intel that no one will be able to catch up. In short, the consumers will get screwed.

Re:

[explosivejared (1186049)]

you will still have the option to choose the CPU.

Exactly, buying something at the lowest price now != being a rational actor in a market economy. It's the line of thinking that the only cost associated with doing business is the one I see right in front of me that has led to the credit crunch, the negative savings rate, and just about every other economic problem we have now. If we could please just squash that now, we would all be a lot better off. You save a few bucks now by going with a cheaper product,

Re:

[RightSaidFred99 (874576)]

Actually, you're 180 degrees wrong. You're effectively rewarding incompetence. This is why many people are against the credit bail-out. You are saying that even though these companies made risky loans and lost a bundle of money on it, we're going to bail them out because it's in our best interests. This logic gets built into the market, and people start making bigger and bigger risks.

Your "informed economic decision" effecitvely rewards a company for poor performance. Not only that but it gets you, t

Re:

[agent_no.82 (935754)]

Except that given the situation here, the substantial costs of entering the CPU market mean that if Intel does end up bankrupting AMD, (which is quite close in performance outside the high range) there will be no serious competitors and thus significantly less incentive for them to continue a CPU arms race. Also, consumers will end up paying significantly more than they would otherwise.

Re:The line forms to the right

[RightSaidFred99 (874576)]

That's the way the market works. Let's say AMD goes out of business and Intel raises prices. Suddently, there's a huge incentive for competitors to come up with something new and better. If Intel charges $1500 for a 3GHz 8-core processor supposing AMD goes out of business, they've taken CPUs further away from being a commodity item (which they're dangerously close to now). Suddenly not only the big players but the small research companies have an incentive to do something new to take a part of that market.

For example, they may develop a much faster incompatible chip which can run virtual machines emulating x86 at the same speed as a real x86 chip. Or they may just take AMD's IP and build on it to create a competitive chip and use someone else's fabs.

High prices from a monopoly on a non-supply limited item are part of the marketplace. It drives innovation. So in the end, I don't even find your "worst case" scenario all that bad. But on a realistic front, AMD isn't going out of business. Even if they bankrupt their products will still be made and sold for the forseeable future by _someone_.

Re:

[RightSaidFred99 (874576)]

If that where right 100% of the time then where is the competition for microsoft?

You're joking, right? There is tons of competition for Microsoft. Linux in hundreds of variations, Apple, Open/FreeBSD, [Open],Solaris, and uncountable niche OS's. In the application space there are all kinds of products in every field they sell in that compete as well. This exactly highlights my point. People didn't like MS OS's and/or their prices, so they went and developed Linux and all the other OS's.

And that's precisely why MS doesn't charge a ridiculous amount of money for their product, they

Re:The line forms to the right

[explosivejared (1186049)]

It's a little different when you're bailing out Goldman Sachs, which doesn't have an 800 lb gorilla of monopoly on its back like AMD does. Bailing out banks for insane lending creates moral hazard and positively reinforces bad behavior. Investing in AMD doesn't. It promotes competition and a more efficient market.

All those differentiations you speak about will suffer if there is only one manufacturer. And we all know how well the government busts up monopolies, so if you have any vested interest in CPU's, support AMD.

Please do tell how promoting an actual market is a misguided sense of "econ-101." Note I was speaking about the specific AMD situation when making my argument. I'm not here to argue if all things are equal between the two, just that having AMD around is important.

Re:

[dave420 (699308)]

Most folks just want the best processors, which at the moment means Intel. It's easy to forget most folks who buy CPUs aren't thinking about the effects of their purchase, they just want the best tool for the job. Maybe AMD should be more aggressive when it comes to their marketing and parter deals?

Best Processors

[Enderandrew (866215)]

At what level? At the top level, yes Intel has a lead right now. There is no denying that. But the low-end AMD processors are so cheap, they give far better bang for the buck. The last processor I bought was an AMD X2 3600+ brand new for $35. At the time, the cheapest comparable Intel dual-core offering was $150. They benchmarked about the same, and the X2 overclocks amazingly well.

$35 or $150, wow that is a tough one.

Again, Intel isn't always the best processor.

Re:

[FredFredrickson (1177871)]

I was about to say - Most of the people spewing the intel is better than AMD crap are just reciting marketing BS.

Thanks to the fact that there's no easy way to compare which processor is supposed to match up with which when it comes to comparing brands- the only way I find you can compare processors is price class. I find every AMD processor I've tested outperforms it's Intel same-price-class counterpart in benchmarks.

Since we can't compare things like mhz anymore, all we have are benchmarks and price cla

Re:

[TheRaven64 (641858)]

Most folks just want the best processors

Very few people want the best processor. Most people want the cheapest processor that is 'good enough.'

Don't you mean

[zappepcs (820751)]

Money for nothing and chips for free?

Gone Too Far

[Frosty Piss (770223)]

As to Media Markt, if they wish to sell only the crap from Intel, why shouldn't they be allowed to? Simply because you don't "like" a company (...Microsoft...) doesn't mean in a free market, retailers should not be able to be exclusive.

When a group actually hates a company as much as people do here with Microsoft/Intel, it's easy to become overly biased against the rights of people to choose these two businesses.

Re:Gone Too Far

[Silver Sloth (770927)]

How it works:-

1. Dominant player in market cuts costs to below cost of manufacure
2. Secondary player has to cut costs to match
3. Secondary player has shallower pockets than dominant player and goes out of business
4. Dominant player is now only player and can raise costs as high as they want to make back all they lost in action #1

There are reasons for market regulators, and not just because we European liberals like big government.

Re:

[abigsmurf (919188)]

The problem is Intel are producing better chips than AMD and are able to make them for less because of lower failure rates and smaller die sizes. The main problem with the CPU industry at the moment is AMD are just doing bad in general and not keeping pace.

Re:Gone Too Far

[stevedcc (1000313)]

The problem is Intel are producing better chips than AMD and are able to make them for less because of lower failure rates and smaller die sizes. The main problem with the CPU industry at the moment is AMD are just doing bad in general and not keeping pace.

If this had always been true, it might be fair to say that AMD were a poor competitor. However, from the launch of the Athlon until the launch of the Core2, for several years, AMD had a better product, yet found major difficulties in getting market share. Intel's alleged tactics are illegal, and it's right that they should be properly investigated. It's just a pity that any fine imposed will hurt Intel but not benefit AMD or consumers, who are the real injured parties.

Re:

[Guspaz (556486)]

It doesn't help that, the moment they start to get traction towards resolving their anti-trust concerns, their products take a nosedive in quality.

In the CPU front, the Core 2 is spanking the Phenom in all market segments, although the Athlon series is still holding on to the very low-end on low cost alone.

On the GPU front, they just gave up on the high end entirely for a while. The only way they can even compete with nVidia's 8800 series (which is about to be replaced with new cards) is to stick two of the

Re:Gone Too Far

[matria (157464)]

This happens in other markets as well. Some years ago my husband worked for Pfizer. Pfizer and most of the other big pharmaceuticals made penicillin. It wasn't exactly a large profit item, but a good seller. Then a European company started "dumping" and nobody else was willing to match their prices. So all the other pharmas quit making penicillin; most of them re-tooled their penicillin facilities to other products. Pfizer also quit making penicillin, but their equipment was so old they just left it sit. The European company misjudged and ended up going out of business. Suddenly there was no supply of penicillin. So for a couple of years, until some other companies got their penicillin facilities retooled back to making penicillin, Pfizer had the only world supply of penicillin,and could pretty much charge whatever they wanted.

So this sort of behavior is definitely not a good thing. Except for Pfizer there for a while, anyway.

Re:

[Otter (3800)]

As it happens, the EU was raiding pharmaceutical companies [corante.com] a few weeks ago over generics pricing issues. Sounds like they're getting pretty, err, proactive on antitrust issues over there...

That's fine

[Sycraft-fu (314770)]

But that's clearly not the case with Intel. Their products are not being sold below cost, indeed they are making plenty of money. Also a little searching turns up that they aren't dumping (selling cheap abroad and full price at home) or anything like that. So what it appears to be is that Intel produces a quality product that AMD is having trouble competing with. Well, that's the free market at work. AMD's problem isn't that Intel is undercutting their prices to a level they can't sell at, their problem is

Re:

[Silver Sloth (770927)]

From TFA

Intel has been accused of trying to abuse its dominant market position by selling its products below cost price and making cash payments to customers.

Maybe TFA is wrong but they seem to have been accused of selling below cost.

Re:

[Pulzar (81031)]

This is especially true since the processors are their big market. I mean I could see Intel doing it with some other market, like say NICs, that is a small part of their business.

It's exactly what they were doing when AMD was dominating the desktop and 1P/2P server performance with Athlon. They were giving big customers huge rebates on their desktop and 1P/2P server chips to keep AMD from gaining market share, while raking in the profits on the mobile and 4P+ server chip sales since they were still dominati

Re:

[Frosty Piss (770223)]

Yes, but in a free market, there WILL be losers and winners. Otherwise, maybe we don't have a free market? It is, after all a competition to the death (the way we play it these days), it's not a friendly game where we split up the market and we all get some...

Re:

[Silver Sloth (770927)]

This assumes that you believe that a totally free market is a good thing(tm). We Europeans tend to take a more interventionist approach, especially where one competitor seems to have been accused of breaking the law. If Intell were sending round the goon squad to smash up AMDs manufacturing plants would this be Ok because

there WILL be losers and winners

Re:

[ArcherB (796902)]

As to Media Markt, if they wish to sell only the crap from Intel, why shouldn't they be allowed to? Simply because you don't "like" a company (...Microsoft...) doesn't mean in a free market, retailers should not be able to be exclusive.

The problem is not that Media Market was selling Intel because they liked them, but because they would get special deals from Intel if they DIDN'T sell AMD. That's what Intel (allegedly) does in markets where AMD might stand a chance.

Think of it as the Walmart strategy. They move into a town and sell everything below what they pay for it. There is no way that the local stores can compete and go out of business. When Walmart is the only game in town, they raise prices and shift those profits to the next

Re:

[Frosty Piss (770223)]

The problem is not that Media Market was selling Intel because they liked them, but because they would get special deals from Intel if they DIDN'T sell AMD. That's what Intel (allegedly) does in markets where AMD might stand a chance.

And this is business, as it has been for 100's of years. If AMD has a good product, they can do the same. By the way, last time I checked, the Apple Store doesn't sell Zunes. Shall I bitch at the regulators about competition?

Re:

[mpapet (761907)]

if they wish to sell only the crap from Intel, why shouldn't they be allowed to?

This kind of mentality wrongly assumes that there is a sort of perfect market state that translates into people switching retailers/PC's as features/price change. This is totally untrue. Consumers of all kinds normally suffer all kinds of bad product based on a number of factors that can be generalized into the herd mentality. Look at how much consumers have been overcharged for CD's and DVD's.

Intel isn't the only one doing i

Re:

[everphilski (877346)]

This kind of mentality wrongly assumes that there is a sort of perfect market state that translates into people switching retailers/PC's as features/price change.

If I want to change from an Intel to a AMD CPU, like I did last year, all you have to do is purchase the replacement CPU and an appropriate motherboard. All other perhipherals are usable under either system. It doesn't get much easier than that ... It isn't like I have to throw away my video card or data to upgrade CPU's.

Oh. If Only...

[mpapet (761907)]

In the non-technical world your statements are generally inconceivable.

1. If you are running windows like most consumers in the world, you cannot do that without a fresh install of the OS. As more of these users are forced into Vista, this gets harder as there are license restrictions preventing this.

2. Regardless of OS, you understand that the bits and bobs are roughly interchangeable. You are in the minority.

3. the vast majority of computer users are not you and generally don't mind over paying for thei

Re:

[everphilski (877346)]

If you are running windows like most consumers in the world, you cannot do that without a fresh install of the OS. As more of these users are forced into Vista, this gets harder as there are license restrictions preventing this.

Like the AC said, I swapped out chips and motherboards without reinstalling Windows. Just installed updated firmware drivers and an AMD dual core patch to Windows and I was good to go.

Regardless of OS, you understand that the bits and bobs are roughly interchangeable. You are in

Re:

[Frosty Piss (770223)]

Well, then, the only real solution is where The State operates all retail stores and markets all products equilly. As in Cuba and Soviet Russia.

Re:

[henni16 (586412)]

As to Media Markt, if they wish to sell only the crap from Intel, why shouldn't they be allowed to?

I'm pretty sure it isn't about prohibiting them to sell what they want.
It's a lot more likely they targeted MediaSaturn to gather evidence for illegal business practices by Intel, i.e. finding out whether the decision to go Intel-only is based on bribes, kickbacks etc.

AMD has built some big expensive fabs in Germany

[mikeabbott420 (744514)]

When this happens in Ireland it will be a surprise.

What about Saturn?

[Xelios (822510)]

Saturn is another big electronics retailer in Germany, will they be raided too? Because like Media Markt they don't sell AMD either. Not surprising considering they're both owned by the Metro conglomerate [wikipedia.org]. Must make for some good 'competition' in the electronics market...

Re:

[Znork (31774)]

Must make for some good 'competition' in the electronics market.

Well, one can seriously wonder about people who buy computer equipment at Media Markt. They're yet another of those 'trick the consumer into visiting our shop by advertising products we don't have for prices we wont sell them for then talk them into a sale' corporations that don't even dare list their prices on comparison sites.

I wouldn't trust them to sell me an electric toothbrush, nevermind a CPU.

More raids

[dj245 (732906)]

The EU recently raided [eubusiness.com] several Classification Societies [wikipedia.org] belonging to IACS [wikipedia.org] for the same reason. Could they be flexing their muscles? How long has this agency been active?

Re:

[Penguinisto (415985)]

That's weird... aside from 'competition concerns', I don't quite grok the connection between ship inspectors (I know, but for brevity that's what I'm calling 'em), and the computer industry.

It's like there's some guy in Brussels with a blindfold and a great big dartboard, each segment of it tagged with an industry ripe for legal harassment or something.

I mean, if they're that eager to insure competition and to stamp out anti-competitive behavior, then why not abandon the formal niceties (and periodic fi

Re:

[KokorHekkus (986906)]

For at least a decade if not decades. It's best way to secure compromising documentation when there's more than two parties or several locations involved. One tip-off might throw parts or the whole case and with todays communications it's easily done. They're usually called "dawn raids".

From what I've read I think that it's often a tip-off that starts the investigation, then they investigate that company which quite often is helpful and turns on the partners because that will lessen the fines from the co

Printers?

[JCSoRocks (1142053)]

It's interesting that this is a big deal in the chip industry but not with printers... Everyone knows printers get sold for nothing and all the money is made on the ink and paper. You don't here about raids for selling printers below cost. I'd be interested in knowing what percentage of profit comes from CPU's versus graphics chips, chipsets, controllers and the myriad of other products that AMD and Intel make. If CPUs don't represent a significant portion of the income for either business - what difference does it make? In that case they're both obviously playing the printer game where their CPU is priced cheap so that you'll buy their chipset, graphics, etc chips too.

Re:Printers?

[dasbush (1143709)]

Everyone knows printers get sold for nothing and all the money is made on the ink and paper. You don't here about raids for selling printers below cost

Since it is generally accepted by all printer manufacturers that there is no money in printer, but rather in the ink, all the companies are doing it. In fact, since there are more than two companies doing this practice and surviving (even thriving) then it clearly is not a monopoly. If there were only two printer companies in the world, and the much larger one started selling ink for nothing, then the analogy would be comparable.

That said, you raise an interesting point about where Intel/AMD make their money. Is it in the CPU or the Mobo's/Video Cards/etc that are optimized to work with the CPU?

Re:

[Anne Thwacks (531696)]

The raid does not prove they are guilty, but it may provide evidence!

If the suspicions is of price rigging through threats to media markt, then perhaps there will be incriminating e-mails.

OTOH, We dont need incriminating e-mails to know that Lexmark are guilty - why not just fine them - a lot - I'd love lower taxes!

What is it supposed to achieve?

[sane? (179855)]

I mean, come on. Its well known that governments will attempt to physically raid companies in search of the evidence they don't have. This is a high tech firm. Surely any sensible CEO would ensure that any questionable docs were held securely in another (corrupt) country, behind heavy duty encryption and only accessible by remote session.

Its not as if there would be a vast number of them, and the skills to make this invisible to the raiding agencies are not likely to be in short supply in somewhere like Intel.

All you can assume is that these raids are a show of force, not seriously expected to deliver anything of value.

Historical Monopolistic Practices

[foxalopex (522681)]

There were several articles about a year ago about Intel limiting shipment of CPUs to retailers who dared to sell AMD products. This was back when Athlon64 was king of the hill and P4's were terrible. Sadly, I'm not sure if much came out of that. It may be for this reason that the newer AMD chips are not as great. AMD may have never gotten the extra profit it was entitled to make the next better generation of chips. Seeing how slow most governments are to respond this may be a response to that initial

Re:

[FishWithAHammer (957772)]

Personally I think Intel should get fined anyhow. AMD needs a little help to make sure they survive. If AMD bites the dust we all loose in a big way.

If AMD dies, someone else will take their place. Intel has done nothing that other industries don't do and punishing them for making better chips than AMD and exploiting that advantage is immoral. (Because that's what this really boils down to--AMD is not as equipped for survival as Intel is, and is suffering for it.)