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Sources Say EU Will Find Intel Anti-Competitive
Posted by
kdawson
on Mon May 11, 2009 07:04 AM
from the slap-on-the-wrist-with-a-broadsword dept.
from the slap-on-the-wrist-with-a-broadsword dept.
Anarchduke sends in a Reuters story quoting unnamed sources who say that the European Union has decided to find Intel anti-competitive. The finding should be announced in the coming week. "...the Commission will say Intel paid PC makers to delay or scrap the launch of products containing AMD chips. The Commission will characterize the payments as 'naked restrictions' to competition, the sources said. ... Intel set percentages of its own chips that it wanted PC makers to use, the sources said. For example, NEC Corp was told that 20 percent of its desktop and notebook machines could have AMD chips, the sources said. All Lenovo notebooks had to use Intel chips, as did relevant Dell products. The figure was 95 percent for Hewlett-Packard's business desktops, they said." Previous infractions by Intel include giving illegal rebates to computer makers back in 2007 and paying retailers not to sell AMD-based computer systems.
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Intel Receives Record Fine By the EU 469 comments
Firefalcon writes "Intel has been fined a record 1.06 billion euros ($1.45 billion / £948 million) by the European Competition Commission after being found guilty of anti-competitive practices. This makes Microsoft's 497 million euro fine in 2004 (which was a record at the time) seem like a slap on the hand. Reports had previously suggested that the fine would be similar to Microsoft's. Intel was charged (among other things) with encouraging manufacturers and retailers to purchase fewer (or even not stock) AMD processors. More details of the ruling are on the European Commission's Competition website. Intel said they will appeal the fine."
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Skype (Score:5, Informative)
I wonder what else they've been up to?
Re: (Score:3, Interesting)
I don't understand why companies like Skype or NBC agree to these types of deals. If an Intel salesperson came to me and said, "You must limit how many calls an AMD processor may receive" or "You may only have 20% of your computers at NBC be powered by AMD", I'd tell the salesman to go fuck off. Intel has no right to come into the offices of Skype or NBC and boss them around.
The only reason I can think Intel got away with such dictatorial demands is because Skype is small, and NBC depends upon Intel adv
Re: (Score:3, Interesting)
I don't imagine Intel sent a sales rep in one day to speak to anyone that lowly.
Far more likely that these deals were agreed on the golf course by senior executives.
Out of curiosity... (Score:5, Interesting)
Are there any plans to punish companies that went along with this? Sure, they could argue they were strong-armed into it by Intel but that's no comfort for AMD and the sales they'll have lost.
Pictures (Score:5, Funny)
...for what the EU executive sees as "naked restrictions" to competition, the sources said.
Pictures of the naked restrictions or it didn't happen.
*SNIFF* They're finally growing up! (Score:4, Insightful)
Re:*SNIFF* They're finally growing up! (Score:5, Interesting)
>>>part of me is a little sad for the young Intel full of potential that got bullied [by Microsoft] into the position its in today.
Young Intel? Bullied? Funny.
Intel was the most-powerful computer company in the late-1980s and throughout the 1990s. Microsoft was just one of dozens of software companies and had no real power until it released Windows 95 and squashed the competition (Os/2, GEOS, DR-DOS). You mis-characterize the situation when you call Intel a puppet of MS. Intel was the goliath of the industry, having ridden the IBM PC platform to 95% dominance.
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Re:*SNIFF* They're finally growing up! (Score:4, Informative)
Windows NT ran fine on Alpha. The problem was that NT was not very well known, and with Alpha being even more rare, there was no applications written for Windows NT Alpha. For a moment Alpha processors was so much faster than Intel processors that they could successfully run simulations of x86 processors faster than the fastest x86 processors. This x86->Alpha translation software is the granddaddy of many modern JIT compilers.
When Intel starting doing hardware simulations of x86 in the Pentium Pro architectures, they finally beat the Alpha on price and performance (thought first in P2). The Alpha guys managed to beat Intel on last time though when they jumped ship help design the Athlon for AMD.
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Re:*SNIFF* They're finally growing up! (Score:5, Interesting)
You must have missed, that intel already was well-known for doing that, ten years ago, when AMD wanted to get mainboard manufacturers to make some boards for the then new Athlon CPU. I remember this, because I bought an Athlon 850 back ten. And there were only 4 companies on the planet who offered a board. And way too late too. Which was because of intel's practices.
I also remember, that it was before 2001, because I moved at the end of 2000 and then already had my new computer.
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Wow, after 9 years justice finally catches up (Score:5, Informative)
Duh.
Intel have been anti-competitive since end of the nineteens. Once AMD vas viable as alternative, suddenly you couldn't buy AMD supported motherboards anymore, let's not talk about systems. Actually Intel did bad for their distributors, because disallowing to sell AMD it allowed to do it their new competitors - in result new branch of distributors grow up with AMD-only stuff (reselling Intel only when it was really needed).
Intel dealership tactics have been ugly all the time. Even now, OLPC got burned from them few years ago.
Business plan (Score:5, Funny)
1. Start up a retail store
2. Get varrious large organisations to pay you to not sell stuff.
3. Profit!
. Intel could pay you to not sell AMD products.
. Microsoft could pay you to not sell your products with Linux on them.
. Jack Thompson could pay you to not sell your products with violent or sexually explicit software on them
. Pepsi could pay you to not sell Coke
. McDonalds could pay you to not have a Hungry Jacks (Burger King) store in your food court
I'm sure there's money to be made here!
Give the Fine to AMD (Score:4, Interesting)
This offers two benefits: the first is that Intel gets hit in the wallet where they need to be for their actions. The second is that AMD recovers some of the money lost due to Intel's actions, thus encouraging actual competition by allowing AMD to survive. As a side benefit of this action, ATI would also survive, thus ensuring that Nvidia has effective competition in the graphics card market,
Re:Give the Fine to AMD (Score:5, Insightful)
Hi, I'm Cyrus and I'd like some money too. Yeah, me too, make the check out to VIA. Hey, DEC here, don't forget me! Yo, dudes, it's Joe Blow; I had a great idea for a chip but I couldn't get VC funding because Intel was in such a dominant position; where's mine?
For a real world example of why this is a bad idea see any music industry initiative to levy recordable media.
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US to strengthen anti-trust enforcement also (Score:5, Informative)
NY Times [nytimes.com] "WASHINGTON â" President Obamaâ(TM)s top antitrust official this week plans to restore an aggressive enforcement policy against corporations that use their market dominance to elbow out competitors or to keep them from gaining market share."
"The new enforcement policy would reverse the Bush administrationâ(TM)s approach, which strongly favored defendants against antitrust claims. It would restore a policy that led to the landmark antitrust lawsuits against Microsoft and Intel in the 1990s."
Re:EU needs more money (Score:5, Insightful)
You mean they shouldn't punnish corporation that harm the free market?
Is it me or is no one even remotely interested in following capitalistic rules?
I mean being for the free market and against socialism and all is not just about exiling the commies and making sure you get the highest bonus you can get away with
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Re:EU needs more money (Score:4, Funny)
...not just about... making sure you get the highest bonus you can get away with
Communist! Get him!
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Re: (Score:3, Insightful)
Re:EU needs more money (Score:4, Interesting)
It appears that not everyone agrees with this: ...
4. Tendency for industry competition to evolve into monopolies and oligopolies
Martin J. Whitman [wikipedia.org]
it's important to remember that "monopoly" when used here doesn't mean 100% of the market, but (like MS) enough of the market that it might as well be 100%, or at least large enough that they can exercise anti-competitive behavior. Some might suggest that Walmart is already influencing the market: I don't know if they're actually anti-competitive, and there are certainly other retailers, but let's face it, they have no artificial monopoly protections such as patents and yet they are still dominating the market. Unchecked (and if nothing else changes) they could easily grow to encompass the majority of the retail market... personally I happen to agree with Mr. Whitman: there needs to be some regulation on business to ensure that there continues to be competition. It's somewhat counter-intuitive, and it's certainly not what Big Business wants people to believe
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Re:EU needs more money (Score:4, Insightful)
it's important to remember that "monopoly" when used here doesn't mean 100% of the market, but (like MS) enough of the market that it might as well be 100%, or at least large enough that they can exercise anti-competitive behavior.
One of the clichés in economics texts is the "5-50" rule of thumb saying that a "market" acts like a monopoly if 5 or fewer companies get 50% or more of the sales.
Of course, like any rule of thumb, this is basically "economics for dummies", because the reality is that there's a continuum of actual behaviors. Some big companies are run by people with ethics and a long-term view (though they tend to disappear with time). Some markets have sufficient delivery problems that they act like local monopolies even with a hundred companies.
But the point of such things is to debunk the traditional even sillier idea that you only have a "monopoly" if there is just one company. This is called the Etymological Fallacy, the idea that the meaning of a word is defined by the meanings of its parts in the original (long-dead) languages. It's popular with the people who like the idea of unbridled, lassez-faire capitalism. But that's not how economists or most other people use the term in English. In the real world, there are such things as "gentlemen's agreements" that produce monopoly markets even when there are several sellers.
It's fairly clear to nearly everyone that the US retail computer business is a monopoly market, although there are two companies supplying the core hardware and two companies providing the OSs. A small fraction of the population can actually name the second software supplier (though very few can name either hardware supplier). But it's been that way here for a few decades now, so we don't expect that we'll see an actual free market in computer retailing in our lifetime. It's interesting reading about efforts in other parts of the world to do something about the monopoly. It'll be even more interesting if they actually succeed, and make it possible for smaller startups to actually do business.
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Re:EU needs more money (Score:4, Insightful)
You mean they shouldn't punnish corporation that harm the free market?
I think you might have an odd definition of "free market". IANAE, but it seems to me that a business protecting its interests against competition is a fundamental part of the free market concept.
You're the one with the odd definitions. If I protect my interests by hiring mercenaries to shoot anyone who goes into my competitor's business that's the free market since I'm just protecting my interests against competitors?!?
As soon as the government starts interfering, it's no longer a true "free market"
Umm, without government protections, there is no free market, just anarchy, which is decidedly unfree for everyone who doesn't have the most firepower.
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Re: (Score:3, Insightful)
The "free" in "free market" refers to freedom of entry and exit. It in no way underwrites the archaic understanding you are pushing. It used to be believed, back before large conglomerate monopolies, that the free market governed itself. Then monopolies happened, either state manufactured via patents, or through what you describe. Nations wishing a free market economy then realized that the "free" had to be enforced via regulations and those regulations needed teeth to punish the Business School Product who
Re:EU needs more money (Score:5, Insightful)
You forgot:
4) The company abuses its dominant position.
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Re: (Score:3, Insightful)
Unless they fine them billions they'll just shrug it off as a business expense.
Even then it's a hollow victory. The people will be the ones paying the fine via increased prices.
Re:EU needs more money (Score:5, Informative)
From what I remember, the commission can impose fines up to 10% of annual turnover, which for a company like Intel is a funny sum of money.
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Re:EU needs more money (Score:5, Insightful)
Even then it's a hollow victory. The people will be the ones paying the fine via increased prices.
Until now people have been paying Intels bribes and anti-competitive cost on top of the hardware prices.
I'd say the prices will stay the same for Intel and AMD should finally be able to compete.
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Re:EU needs more money (Score:5, Insightful)
Normally I would agree with you there, but I'm in a slightly less cynical mood today so I'll offer a more toned down view...
Standard operating practice is to use your dominant position as much as possible without abusing it to the detriment of the overall market. This from what I can tell is what Oracle (to pick one of the above examples) does - if they were unfairly treating companies who ever recommended/use other databases I'm sure wed know as Microsoft would be very quick to head to the courtroom about it and open source groups would be up in arms too.
Going above and beyond using your position, i.e. abusing it to the detriment to others, should not be seen as encouraged by the markets any more than someone accidentally dropping their wallet should be seen as encouragement to take the cash found there-in before handing it to "lost property". It is abuse of the monopoly that the EU is going after, not just use. MS were suspected of abusing their monopoly so were investigated and called to order (with little effect it would seem, but that is a whole different discussion), now so have Intel.
Of course the above depends greatly on the definition of the very fine (and arguable) line between use and abuse... Intel's behaviour in this case is definitely abuse, I dont' see how else it could be interpreted, but in other cases things are not so clear cut. Are some of Google's plans an abuse of their position or just use of it? What about some behaviour of (to be more general) the large chain supermarkets?
One final complication is that some monopolies, often those that stemmed from a company having spun off from a previously government owned project, being forced to *help* the competition or at least provide services to them at no cost greater then they would cross-share themselves in their internal economy. BT in the UK having to provide access to exchanges for other companies to install equipment, where possible, being one example. I don't see how this would be possible with Intel, but you can see the reasoning in some of the edicts given to Microsoft by the EU about making the installation of alternative browsers easy and obvious to the user.
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Re:EU needs more money (Score:5, Informative)
3) The company is American
See this
http://yro.slashdot.org/comments.pl?sid=1228499&cid=27904971 [slashdot.org]
and this
http://yro.slashdot.org/comments.pl?sid=1228499&cid=27904903 [slashdot.org]
for EU companies fined
And get over your 'EU hates US' paranoia
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Re:EU needs more money (Score:5, Interesting)
3) The company is American
The 'anti-american' card you guys keep playing is getting old.
Was the AT&T breakup anti-American? Was the United States v. Microsoft case anti-American?
There is a selection bias here. If a Belgian supermarket chain or a Dutch bank gets slapped by the EU anti-trust commissioner, it doesn't make the headlines on Slashdot, so you will never hear about it.
Fact is, Slashdot reports mainly on technology related things that might interest American readers. The technology monopolies and near-monopolies in the last few decades have mostly been American, so if one abuses its monopoly, it's likely to be an American based company.
The European market is actually a patchwork of independently grown and recently connected markets. Some companies you have never heard of have local (near) monopolies, and face severe anti trust restrictions in those markets. None of this would be news that belongs on Slashdot.
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Re:EU needs more money (Score:5, Insightful)
I agree with you that this does not have an "anti-American" motivation and I'm generally pretty sensitive to that sort of thing. To my mind it's that the EU has a different view of how monopolies should be regulated than the U.S. government does - at this time. I actually agree more with the EU position in the cases of Microsoft and Intel. (I do think the EU tends toward over-regulation instead of letting the markets work while the U.S. seems to be too laissez faire.)
I'm pro-capitalism and pro-market, but here in the U.S. we seem to have forgotten that the objectives of government economic policy should not be the perfect "efficiency" of markets. It should be the well being of it's population over the short, medium and long terms. Capitalism and free markets are a means to this end. They are not the end itself. Neither were mandated by God or advocated by any of the major prophets so why do some people act as if they were?
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Re:EU needs more money (Score:5, Informative)
You get a 1.5 out of 3. The first item is likely true, in part because smaller cases are probably either handled at the national level (do not need to involve the EU) or perhaps such cases exist but do not get the same media coverage. But OK, I'll give you that one.
As to item 3: the EU also regularly heavily fines large European companies. For example, Siemens got fined for 400 million euro [spiegel.de] for forming a price cartel. Also see here [rawstory.com]: "The total fines slapped on 11 companies based in the EU and Japan amount to some 750.7 million euros. [..] The total penalty for the cartel is the second-highest imposed by the commission [as of 2007], following a record 790.5 million euros for fixing vitamin prices in 2001".
Oh, and before you ask, that vitamin cartel involved Hoffman-La Roche of Switzerland, which got fined 462m euros, and BASF of Germany, which got fined to the tune of 296m.
As to 2: the company doesn't have to be a monopoly either, although such fines do indeed commonly concern oligopolies (since forming cartels is a very lucrative prospect in such an environment, for obvious reasons). See above examples. Because of such cartels you could perhaps call this "essentially a monopoly", so ok, half point there.
I'd have assumed you where just trolling, but since you are getting upmodded and I've seen such sentiments in other discussions as well, I thought I'd point this out.
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Re: (Score:3, Informative)
A good example of a case covering both points you make was the BA/Virgin price-fixing case [wikipedia.org], handled by the Office of Fair Trading here in the UK instead of by the EU. It wasn't monopoly that caused the problem, but oligopolist price fixing.
The US DoJ got a look in on that one for obvious reasons.
Re: (Score:3, Insightful)
Let's do a foot race analogy!
Two racers competing. Ideally, the faster runner should win. But one competitor isn't quite sure that he will win or that the margin will be big enough. So instead of focusing on being the best runner he can possibly be, he sets about bribing judges, paying shoe sellers not to sell the best shoes to the other runner, and making deals with sponsors not to sponsor the other runner.
This is about fair competition and calling people out for using dirty and ILLEGAL tricks to suppre
Re:Tell me who actually pays? (Score:4, Insightful)
Nice idea, but imagine the grief of having a major processor line forbidden from sales in general. AMD couldn't pick up all that slack, and other CPU companies are hardly in a position to replace Intel.
Result? A vacuum of components. Not good for the industry in general.
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Re: (Score:3, Insightful)
And this is what is known as "cutting off your nose to spite your face".
Re:Tell me who actually pays? (Score:5, Insightful)
If it would stop operating in Europe, the local manufacturers would just buy the chips from USA while AMD cranks up its production to meet the demands for a whole continent which despises its competitor.
Please think before you write.
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Re: (Score:3, Funny)
Re:Tell me who actually pays? (Score:5, Informative)
A better solution than taking money, banning their product for a set time.
No, that would be punishing EU member states at least as much Intel. Have you looked at the market for servers lately? Desktops? Laptops? Intel is subject to anti-competition laws because it has a dominant market position. If you were to suddenly cut their products out of the market, that would hurt every manufacturer of IT equipment and every business that uses said equipment. That is a great way to hurt the EU's ability to perform in the world market.
The reason a fine is useful is precisely because the costs are passed on to Intel customers worldwide, not just in the EU. This means that it really is Intel that is paying for its behavior on a global scale.
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Re:Tell me who actually pays? (Score:5, Insightful)
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Re:Tell me who actually pays? (Score:5, Insightful)
Exactly who is paying the fine?
Uh, people buying Intel products.
They could buy AMD products, instead, which is more or less the point.
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Re: (Score:3, Insightful)
Unfortunately no. Banning their product effectively fines huge numbers of completely innocent smaller organizations who rely - in whole or part, directly or indirectly - on Intel's products for their income.
I don't think it's fair that little guy should suffer just because the big guy who's scraps he scavenges is a douchebag?
Re: (Score:3, Insightful)
Re:Tell me who actually pays? (Score:5, Interesting)
Another alternative would be to force the companies named to use a minimum 50% AMD chips averaged over the next five years.
Extra costs for them, loss of market share for Intel. Seems to me like justice is done all round (I consider the companies almost as guilty as Intel for their complicity).
Yes the price of computers would undergo a hiccup as they retool for different chips but that's not _really_ any different then Intel being fined billions of dollars.
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Re: (Score:3, Insightful)
All the time?
Re:EU is EU Centric (Score:5, Informative)
In case you need examples:
Saint-Gobain ( 900m euro)
ThyssenKrupp ( 500m)
Hoffmna-La Roche ( 500m)
Siemens ( 400m)
Pilkington ( 400m)
BASF ( 300m)
Otis ( 300m)
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Re: (Score:3, Insightful)
First, your arithmetic is atrocious. Work on that. Second, I'm not entirely sure what you mean by "the Microsoft fine", seeing how Microsoft has been fined several times, since unlike those European companies, it just doesn't want to learn. Third, none of the companies I listed were stupid enough to try to string the commission along [guardian.co.uk]. But then, with profit margins reaching 81% [europa.eu](par. 464), perhaps it's not really a matter of "stupidity", ey.
Re:EU is EU Centric (Score:5, Informative)
You mean EU firms such as Lufthansa [europa.eu], Daimler [europa.eu], Deutsche Bank [europa.eu], Viag Interkom GmbH [europa.eu], Telefonica S.A. [europa.eu], KONE GmbH [europa.eu], those kinds of firms?
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Re:EU is EU Centric (Score:5, Informative)
Ireland - GP visit: 60, prescription drugs - cutoff is 130 per month, per household, Accident and Emergency visit - 90 unless referred by a GP, public hospital outpatient visits - 90 charge. Waiting lists for public outpatient procedures can be the better part of a year (private patients are treated in public hospitals and get priority).
Some of us haven't experienced enough EU influence.
People earning 30,000 or even more might be paying no income tax, and yet are "poor" due to having to pay through the nose directly for everything.
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Re: (Score:3, Informative)
And the free market works even here. Here in Belgium you can choose between the Christelijke Mutualiteit, Bond Moyson and the neutral health care insurance.
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Of all the reasons to speak against universal healthcare, "theft of property and labor" based on your value judgment of another life is not one of them.
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