Intel in Antitrust Trouble in Japan 203
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."
Re:Give me a rational reason why this is a problem (Score:5, Informative)
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.
Re:Give me a rational reason why this is a problem (Score:3, Informative)
They gave their customers lower prices if they guaranteed not to buy their rival's chips. To my mind, that is unfair.
Justin.
Re:Give me a rational reason why this is a problem (Score:2, Informative)
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 would buy 10 of whatever it was from Intel nomatter how many he might buy from AMD. See the difference?
Re:Give me a rational reason why this is a problem (Score:2, Informative)
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." Attempting to coerce your vender to not carry your competitors' widgets is anti-competative.
Guess you didn't RTFA (Score:1, Informative)
Re:Give me a rational reason why this is a problem (Score:3, Informative)
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 Company A and Company B different prices, but NOT for certain anticompetative reasons. Its the same as Intel refusing someone business - they can refuse anyone business but NOT for reasons like race, gender etc.
Re:What's missing the from Intel statement (Score:1, Informative)
Simple, AMD can't supply enough chips. FAB25(Texas) is fairly old and uses an Al process, it's not capable of producing modern Athlons. FAB30 is AMD's only facility that produces Athlons currently, and even it's not built to use 300mm wafers. FAB36 is going to come online soon with all the gizmos and features a new FAB should have, but AMD had to go in to a joint project with other firms to pay for its construction since a new FAB costs more than they can afford given their current size. FAB36 in turn will allow AMD to boost their production and plan for the future, but even it is only a drop in the bucket compared to the capacity Intel has.
AMD's problem globally at this point isn't their technology or even Intel's meddling, their problem is that they can't even begin to produce enough chips to be the majority holder. They're still too far behind Intel on the growth curve to keep up, and the only solution to that problem is more years of good products bringing in solid growth.
Re:Dell and AMD (Score:1, Informative)
Supposing AMD did have the capacity, that would place Dell in a great position. Should Intel then come forth with some sort of ultimatum, the proper response would be, "If you raise prices on your stuff, we'll stop buying from you." Imagine the Wall Street reaction if Dell announced that all new Dells would be featuring Athlons. Intel would see unprecidented drops.
The interseting and sad thing is, AMD can't really justify an explosive increase in capacity without an order from Dell. And Dell won't wait for AMD to build new factories when approached.