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Intel Receives Record Fine By the EU
Posted by
Soulskill
on Wed May 13, 2009 07:52 AM
from the going-for-the-high-score dept.
from the going-for-the-high-score dept.
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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Sources Say EU Will Find Intel Anti-Competitive 210 comments
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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How did they pick the number? (Score:5, Funny)
I saw this on a personal basis..... (Score:5, Interesting)
I was the Director of Engineering for VLSI Technology's PC Chip set division back in the 80's. Back in those days, there were dozens of companies making chip sets for Intel CPU's and Intel, surprising as it may sound, did not. The chip set business was interesting in that it started with C&T. Zymos was second and VLSI was third. By the time we got into it, and in particular, after we were picked by IBM to be their chip set provider, the bay area VC market must have been swamped with business plans of every dog and his brother wanting to start a chip company making chip sets. If you can remember too, there were hundreds and I do mean hundreds of PC companies. Fast forward a few years. Things are now pretty crazy. VLSI made it to be the top chip set supplier but the competition was intense. The hundreds of PC companies has now fallen to around 10-12. The dozens of chip set companies has fallen to 4 or 5 but still no Intel. This is around the time that the Pentium first made its debut. Now, to make a chip set, you need these very important things called "Yellow Books" ( maybe they were Red.... hmm that was a few years ago) . These are the specifications of the next CPU from a "certain" CPU manufacturer. Without the yellow books, you can't make a chip set because you have no idea what the memory interface is going to look like. If you don't know the memory or peripheral interface you can't make a north bridge for sure and your south bridge is going to be a hack. Soooooo, it was at this time that we were working on our next generation chip set for the Pentium. We were going crazy because, for some very strange reason, we had yet to get the "Yellow Books". We could and did make educated guesses as to what the memory interface should be but we did not know for sure what it would look like. Well you know what? Gee, like magic, Intel announces and samples their Triton chipset. (Which we taught them in large part how to make pursuing a CF called Polar and Draco with Intel, but that is another story.... I digress) And Andy G. tells the press how Intel was just "forced" into making their own chip sets because the external chip set vendors just could not keep up. Oh yea, gee wizzz, we get the specs the same week you sample and yea, we just can't keep up can we. Where it really got interesting is when we got our chipset out and our sales team was trying to sell to our customers, which now as I said is a VERY short list, it seems a certain "I" company was bundling their chip sets with their CPU's. You, as a PC company, "could" buy just CPU's from them for price A or you could buy CPU's + Chip set for price B. I let you guess which was the larger. Oh, yea, and if you selected the A option. They ( the "I" company) could not guarantee delivery.
So, we went from $250M/year in sales to $25M/year in sales in 12 months. Our division was decimated. I have never seen anything, short of last Octobers stock market, fall so hard and so fast.
In retrospect, I don't blame Intel for getting into the chip set business. Hell, I am surprised actually it took them as long as it did but both the tactics they used, and quite frankly, the stupidity of the upper management at VLSI laid waste to an incredible group of people, and at the time, a great place to work. Ah, well. That's competition. It was fun while it lasted.
Re:I saw this on a personal basis..... (Score:5, Informative)
Or maybe not, and intel just knew when they withheld the yellow book, they could destroy everyone, because they had such a dominant monopoly, and because it was the right thing to do to maximize profits when you gut no conscience... they went with it.
I'm sorry, but from what I heard from my sources, GP it very believable, if not just the tip of the iceberg. (Because I know for a fact, from own experience, that they forced mainboard manufacturers to either not make AMD Athlon mainboards, or not get any specs and chipsets from them anymore.)
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Why? (Score:5, Insightful)
It must be really worth it for these big companies to risk millions in fines to making competition suffer.
I always wondered if they really make that much more money (after the fine) or if what they really are after is the destruction of the competitor (AMD in this case)...
Re:From the horse's mouth (Score:5, Insightful)
There's a bit of a difference between offering a volume discount and a discount that specifically hinges on you not purchasing a competitor's products.
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Re:From the horse's mouth (Score:5, Insightful)
Volume discounting means "buy more and we give you a discount". What they were doing was "don't buy from others and we give you a discount.. you don't even have to buy more from us". There's a very clear difference between that and Sam's Club's discounts.
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Re:From the horse's mouth (Score:5, Informative)
I think the difference here is that Office Max can't give you a bulk discount contingent on you not buy from staples.
Ex (ok):
Office Max: Pens are $1/ea, but if you buy 100,000+, they are $0.75/ea
Ex (not ok):
Office Max: Pens are $1/ea, but if you buy 100,000+ AND no more than 10% of your purchased inventory comes from our competators, they are $0.75/ea
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Re:From the horse's mouth (Score:5, Interesting)
From what I understand, the way it was done was subtler than that. "We estimate you need 100k pens, so if you buy 90k+, you buy at discount". "Oh, you need 50k pens? We'll offer a discount starting at 45k purchases". Essentially, they never explicitly say "you can't have more than 10% of your stock in AMD products", but, by tailoring their bulk prices on a per-client base, they effectively achieve the same effect.
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Re:From the horse's mouth (Score:5, Insightful)
Intel's "crime": "'Intel awarded major computer manufacturers rebates on condition that they purchased all or almost all of their supplies, at least in certain defined segments, from Intel.'
This is called "volume discounting". Office Max and Sam's Club are guilty of similar "crimes" and "anticompetitive" behavior, it seems.
You are wrong because a rebate happens after the fact. A volume discount is provided up front. Intel has always provided volume discounts, and still does, and nobody is complaining about that. The complaint is that intel is instead promising to give money if the manufacturer shuns AMD, then delivering the payment. This is similar to Microsoft threatening to raise OEM prices if OEMs bundled certain software or sold machines with other operating systems installed.
The second case is pretty clearly anticompetitive; the first case is, after thinking about it for like two fucking seconds also quite anticompetitive. You're FREE to say "if you buy ten times as many units from me, I'll give you a discount." That's not what's happening here. Instead, it's "I'll give you this great price, but only if you don't buy anything from my competitor." Maybe you think that should be legal, okay. But it's still different from a volume discount.
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Re:From the horse's mouth (Score:5, Funny)
Instead, it's "I'll give you this great price, but only if you don't buy anything from my competitor."
But haven't I heard of people becoming the "exclusive" supplier for companies? Isn't this really just a normal business tactic?
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Re:From the horse's mouth (Score:5, Informative)
It is legal and ethical for a non-monoplistic company to offer volume discounts.
It is NOT legal and NOT legal for the single biggest chip maker to insist you don't buy their competitor's product except in minimalistic amounts.
The differences are
1. Volume discounts are not affected by your purchases from a competitor. They are simple standardized discounts.
2.When you are so big and powerful that your clients literally fill threatened and has no choice but to acccept the terms of your contract, then yes the government DOES get to affect the terms of the contract.
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Re:Intel Appealing? (Score:5, Funny)
wow, never saw that coming
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Re:Intel Appealing? (Score:5, Funny)
Now witness the final battle between Captain Obvious and the Mighty Sarcasmo!
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Re:Intel Appealing? (Score:5, Funny)
Well played, Sir, well played indeed.
Now do you have any suggestions for drying coffee out of a keyboard?
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Re:Intel Appealing? (Score:5, Funny)
Now do you have any suggestions for drying coffee out of a keyboard?
And Commander Cliche checks in.
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Market Conditions Forced the EU to Act (Score:5, Interesting)
In this scenario, the EU must take care to ensure that Intel's only other serious competitor, AMD, be given a fair playing field in which to compete. The multi-billion-dollar (trilion-dollar?) computing market ranging from netbooks to tower-stations depends on getting the best processor bang for the Euro.
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Re:But where does all that money go? (Score:5, Insightful)
Without knowing exactly where it goes I can only speculate, but could this fine by so high to help fix European budgets stretched too thin by a weak economy?
No, it would not even be enough to fix the buget of a single EU country, but high enough that intel basically feels a smack on the hand,
besides that the entire thing now goes into revision several times and by the time everything is settled the economy crisis is over.
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Re:That was 2 Euros of course (Score:5, Funny)
(why does Slashdot not display the Euro sign correctly when pretty much every other internet forum does?)
Just to piss you off.
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Re:That was 2 Euros of course (Score:5, Informative)
why does Slashdot not display the Euro sign correctly when pretty much every other internet forum does?
because of the encoding they use in their html. It is ISO-8859-1 not UTF-8
Since when did /. start letting in non-geeks? :P
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Re:That was 2 Euros of course (Score:5, Insightful)
About the same time they decided not to use UTF-8 like every other website ....
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Re:That was 2 Euros of course (Score:5, Informative)
because of the encoding they use in their html. It is ISO-8859-1 not UTF-8
Since when did /. start letting in non-geeks? :P
Since May 2002, when trolls started abusing bidirectional control characters [slashdot.org].
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Re:That was 2 Euros of course (Score:5, Insightful)
Since May 2002, when trolls started abusing bidirectional control characters [slashdot.org].
So someone decided to throw the baby out with the bathwater, huh?
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Re:That was 2 Euros of course (Score:5, Funny)
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Re:That was 2 Euros of course (Score:5, Informative)
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Re:That was 2 €uros of cours€ (Score:5, Funny)
This is why we can't have nice things.
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Re:But where does all that money go? (Score:5, Informative)
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Re:But where does all that money go? (Score:5, Insightful)
Risky? Courts in the EU are a lot saner than their US counterparts. Don't want to get slapped with antitrust fines? Obey the law. Really. It's not hard. Sell a better product at a lower price, for example.
If I was intel I'd pay my fine and get out.
Good thing you're not Intel. Or running Intel. You would have tried to fix one bad business decision (shady anticompetitive deals) with another really bad business decision (abandoning a significant portion of your market).
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Re:But where does all that money go? (Score:5, Informative)
The EU combined is a bigger market than the US.
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Re:But where does all that money go? (Score:5, Funny)
Somebody below mentioned that according to the laws of the EU, Intel will have to pay now, and appeal later. Can anyone ascribe some truthiness to this?
It has a Truthiness factor of 7.
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Re:But where does all that money go? (Score:5, Funny)
Hrmm... Interesting, interesting. I like it.
And as for veracity?
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Re:But where does all that money go? (Score:5, Funny)
Ah, but that's a '2' on the old OOS (Old OOS Scale) scale. In modern terms, that's a 7 as well. Excellent. Gentlemen, we have a consensus factor of 54, with an implied hearsay vector calculated at 1, leaving us free to continue speculating.
I just want to say, "good work, gentlemen". We've cracked it!
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Re:Still just a slap on the wrist (Score:5, Insightful)
This is just the fine for doing this in the EU, I'm sure the courts in the rest of the world will be happy to add their own penalties for their own jurisdictions, and I'm sure that in many jurisdictions AMD (and other chip makers) will be able to claim damages too.
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Re:Still just a slap on the wrist (Score:5, Informative)
Japan and South Korea have already found in favour of AMD and against Intel. The USA's Federeral Trade Committee began investigations last June at the request of AMD, but I don't know where they are with that investigation now.
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Re:Still just a slap on the wrist (Score:5, Informative)
Well, Euro fines doesn't work that way. First, you get initial warning and fine. After that, you got monitored for years for repeated abuse. If that happens - slap, another fine, possibly even bigger. In the end, Intel will have to comply. Because it's ain US, where you can drag out case in the court. You have to pay fine first.
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Re:Still just a slap on the wrist (Score:5, Informative)
Under the terms of the sentencing, intel has to stop these practices immediately, or face even more fines. As MS found out when they dragged their heels during their trial. This will hopefully have a much bigger effect than the fine, and could save AMD from extinction.
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Re:Still just a slap on the wrist (Score:5, Insightful)
First, you do realize there is a difference between a civil and criminal law? Second, the commission that levied the fine does not have the authority to throw Intel's board into jail.
Of course I'm well aware of those facts. The law needs to be changed so that CxOs of criminal corporations can suffer criminal penalties. These bastards effectively stole billions of dollars, and they get less of a penalty than someone who holds up a 7/11 for a hundred bucks. This is not justice, and it's not a deterrent to future behavior. Hard prison time for these criminals is the only answer.
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Re:The Charges (Score:5, Insightful)
Sounds like a necessary part of business?...
No. This behaviour is anticompetitive. It deprives consumers of choice and the benefits of healthy competition such as lower prices. It is one thing to severely undercut your competitor...that's basic competition and part of free market trading.
However, preventing the competitor from even being considered at consumer level benefits no one but Intel. OEMs are strongarmed, consumers have less choice, competitors go out of business. This is the Monsanto of chip business.
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Re:The Charges (Score:5, Informative)
"encouraging manufacturers and retailers to purchase fewer (or even not stock) AMD processors." How could that possibly be illegal?
How about this "In addition to providing rebates to manufacturers that bought almost entirely Intel products, the Commission found that the chipmaker had paid them to postpone or cancel the launch of specific products based on AMD chips."
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Re:The Charges (Score:5, Insightful)
Yes. Just like breaking a few legs is a necessary part of running a protection racket.
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Re:How to get out of a recession in 2 easy steps.. (Score:5, Informative)
Sorry to shatter your worldview here, 1 and 2 are not related. The fine is not even close to help out of any recession...
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Re:How to get out of a recession in 2 easy steps.. (Score:5, Informative)
As they've slapped plenty of EU companies with fines for anticompetitive behavior, your accusations are fairly unfounded.
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question mark? (Score:5, Funny)
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Re:How to get out of a recession in 2 easy steps.. (Score:5, Interesting)
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Re:How to get out of a recession in 2 easy steps.. (Score:5, Insightful)
I'm no AMD fan, at all. They're a business and I'm a consumer. We're both constantly fighting for gain. I want lower prices and higher quality, they want more revenue. It would be, to put it simply, fucking stupid for me to stand on their side. However when Intel began conducting this type of behaviour it naturally hurts AMDs business, but as I said I couldn't care less about AMD. What I do care about is that I was getting good quality for a low price and due to Intel I'm no longer getting this. So from a consumers point of view: fuck Intel for meddling in my business, not AMDs.
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Re:How to get out of a recession in 2 easy steps.. (Score:5, Informative)
"The Commission finds that Intel did not compete fairly, frustrating innovation and reducing consumer welfare in the process," Neelie Kroes, the European Commissioner for Competition Policy, said at a Brussels news conference announcing the fine. "Given that Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for over five years, the size of the fine should come as no surprise."
...
...
The violations took place between 2002 and 2007, when Intel controlled at least 70% of the world market for microprocessors, Kroes said.
"Intel awarded major computer manufacturers rebates on condition that they purchased all or almost all of their supplies, at least in certain defined segments, from Intel," the Commission concluded.
The Europeans began their investigation in July 2007, and their findings should help U.S. regulators, said David Balto, a senior fellow at the Center for American Progress and a former antitrust official at the FTC and the Department of Justice. He noted that Intel also has been found in violation of antitrust laws by Japan and Korea.
"The relief that the Europeans imposed I think will provide an excellent guide to U.S. enforcers as they try to determine what to do about Intel's exclusionary conduct," Balto said today.
"Their website invites visitors to add their 'vision of tomorrow,' " [Kroes] said. "Well, I can give my vision of tomorrow for Intel here and now: "Obey the law"."
Link [latimes.com].
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Re:How to get out of a recession in 2 easy steps.. (Score:5, Insightful)
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Re:How to get out of a recession in 2 easy steps.. (Score:5, Insightful)
Step 1: Instead of encouraging customers to not buy other vendors products, encourage customers to buy your products.
That wasn't so hard now was it?
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Re:Oh well (Score:5, Insightful)
Good. Very good. They will be selling less of their CPUs and motherboards, and their competition will be selling more.
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Re:Daily Fact (Score:5, Informative)
Err, no? And last I checked, it wasn't the case.
I'm not a big supporter of Intel's practices, and a strong opponent of anything Microsoft does, but come the fuck on! Is that money going to be disbursed to AMD for lost business?
No. Why should it? This isn't a civil suit of Intel vs. AMD. Intel is being punished for breaking the law.
EU anti-trust body has become a sick joke.
Why, because they actually do what they're supposed to be doing? You have an odd definition of "sick joke" there.
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Re:fines, fines and more fines (Score:5, Informative)
Role of the gov's should be to maintain even playing field, not to help any single competitor (and what about Via?)
Besides, one could argue that the ones most harmed by those intel practices were consumers, so the fine has a chance to benefit them in one way or another (yeah, yeah, "that will never trickle down from gov's" - but actually, EU is rather good in this regard; I can see tangible improvements around me after joining (quite recent member state))
Also, if intel will have to somewhat raise prices to recoup the fine, AMD benefits (yeah, yeah, "where's the gain for consumers you were talking about?" - in reality, healhy prices are better than too low, unsastainable ones that would allow killing off competition...at which point intel would get back to pricing practices from the 90's)
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