Intel in Antitrust Trouble in Japan

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."

So carrots are legal, sticks are not

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

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".

Re:So carrots are legal, sticks are not

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

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?

Re:So carrots are legal, sticks are not

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]

What!?

Intel? Antitrust!? I don't believe it! I'd sooner believe that Linus Torvalds switched to a new OS!

Hey Intel...

...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...

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

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."

Woo!

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!

Intel in Antitrust trouble... in Japan!

The meme works.

Last sentence was edited out by slashdot editors

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]

What's missing the from Intel statement

"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.

I'll give you an example...

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.

Re:I'll give you an example...

And when you release the DVD of her doing so, you'll have both the money and the eternal gratitude of millions of us worldwide.

Dell and AMD

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.

Intel continues to believe...

...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...

Re:Give me a rational reason why this is a problem

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

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.

Re:Give me a rational reason why this is a problem

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...

Re:Give me a rational reason why this is a problem

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.

Re:Give me a rational reason why this is a problem

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,

Re:Give me a rational reason why this is a problem

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.

Like that but different

Actually, from the way TFA explained it, it sounded a little more like this:

Company A and Company B buy 500 intel processors.
Intel goes back to those companies and says "Hey, we'll pay you money^H^H^H^H a 'rebate' - if you promise not to buy any AMD chips for a while."
Company A says "ok" and gets the cash, Company B tells them to go to hell, and doesn't get squat.

But who reads TFA around here? :P

Re:Guess they just didn't know.

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 t