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

[grandmofftarkin]

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.

Hey Intel...

[BackInIraq]

...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.

I See What's Happening Here

[flopsy mopsalon]

Clearly, Intel has been trying to take advantage of the weak dollar to expand its market in Japan, and the ever-watchful Japanese regulatory agencies moved to stymie foreign intrusion into one of their most tightly protected markets [clari.net].

Looks to me like this could be the opening salvo of a new trade war. I just hope it doesn't affect the price of ramen.

Last sentence was edited out by slashdot editors

[vincecate]

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]

Antitrust intel?

[vidarlo]

IANAL, but I thought that to be in a antithrust situation, you had to be barring others from market, and also have a significant market share (i.e more than 80%)

In the case of Intel, the consumer has a real choice, in AMD for home pc's, and POWER or AMD for servers. So as long as there is a real choice, there is competition, and IMO, there is very hard competition between Intel and AMD. So I think it's strange that Japan focuses those over Microsoft or other monopoles that is less challenged.

Re:Guess they just didn't know.

[eric76]

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 the price depend on how few of the competitor's product you bought instead of how many you bought from them.

For what it's worth, there have been rare occasions when buying more of an item might lead to higher per unit prices.

One example involved Sony when they first started out. According to an article in one of the business journals about 20 years ago (I think it was Forbes), when Sony showed their transistor radios to one big chain, the chain asked for many more radios than Sony expected. The price Sony quoted was higher per radio than the price they quoted for a much smaller quantity of radios. The buyer from the chain was very surprised and asked why. Sony said that with an order that big, they would have to build a bigger factory to produce them and they would have to earn enough to help pay for additional production capability.

How do they know?

[TLLOTS]

On the whole this does seem like a rather gross abuse of Intel, a company I have previously supported, well not so much supported but remained indifferent towards. However this pricing scheme seems rather off, not just in fairness, but how in the world would they be aware of the volume of a competing product that a company has purchased? Perhaps there's something simple I'm missing (more than likely) but I don't see any realistic reason why Intel would know extensive information about such things, though I'm sure they'd want to know. Anyone care to enlighten me?

Dell and AMD

[Anonymous Coward]

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.

cmp [Intel+AMD],[Microsoft+Linux]

[Quentusrex]

Intel's actions would be like Microsoft selling you the install CD's which scan you computer for linux. If it finds Linux you would have to enter a 'special' serial number that would of course cost you more than the 'standard' serial you purchased with the install disks.

Re:What's missing the from Intel statement

[Anonymous Coward]

If they keep on going like that, pretty soon we'll have Intel turn into a religion.

Intel already is a religion. How else do you explain the fact that they still have a majority market share, even though AMD chips have been both faster and cheaper for about a decade now?

Also, a nitpicking semantic point... the characteristic of a religion is that it believes things for which there is no evidence, not things that there is evidence against. The existence of a god, for example, can neither be proven nor disproven. Therefore, belief in a god is religious. On the other hand, it can be proven that the earth is not flat; therefore belief in a flat earth is not religious, it's just plain wrong.

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

[orlinius]

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...

Counter Justice

[Doc Ruby]

A corporation breaks the law, is found liable, and is forced to pay damages. It complies, but it makes public statements that "we did no wrong". It is therefore claiming it is complying solely due to government blackmail, intimidation: "we're complying because otherwise we might get shut down, or maybe be put in a government cage". Justice is dismised as irrelevant. People have the right to criticized the government, to disagree with it. But where does a corporation's "right" to "free speech" end, and sedition, work to undermine the government and its authority, begin? Corporations already get to use the government judicial system, subsidized by taxpayers, to do much of their most difficult negotiation work. And usually settle before judgement, cheating the public of any benefit from a precedent in the settlement. Why do we allow them to use and abuse our expensive justice system - and work steadily to diminish it, in favor of a power vacuum into which corporate power can easily move?

AMD just told Dell to take a flying leap

[Brian Stretch]

This is just priceless:

U.S.-based AMD Not Seeking Orders From PC Seller Dell
Dow Jones Equity News, Thursday, March 10, 2005 at 00:17

TAIPEI (Dow Jones)--U.S.-based Advanced Micro Devices Inc. (AMD) has no plans to supply chips to Dell Inc. (DELL) in the foreseeable future, despite Dell's No.1 position in the global personal computer business."Our plans to successfully grow market share and improve our finances are actually based on not doing business with Dell. We're not going to give away product just to win Dell,"said Hector de J. Ruiz, chairman, president and chief executive of AMD, at a small media gathering in Taipei on Thursday.

The comments come shortly after Dell's chief executive, Kevin Rollins, said the U.S. personal computer giant wouldn't likely add AMD as a supplier of microprocessors, keeping its long Intel Corp. (INTC)-only policy in place.

AMD and Intel compete in the market for computer microprocessors, which act as the brains of a personal computer.

Ruiz also said his company's plans to introduce a new flash memory chip designed to store data in a range of mobile products like cellular phones, digital cameras and music players, will be in production next year.

He said customers will be able to sample the product, called ORNAND, in the second half of this year.

The chips will combine the speed of NOR flash memory, which takes its name from the algebraic expression"not or"and is used mainly in mobile phones, with the greater storage capacity of NAND, or"not and", flash memory chips.

NAND, a chip segment dominated by South Korea's Samsung Electronics Co. (005930.SE is favored in gadgets that require greater memory storage space, like the iPod Shuffle music player.

AMD's flash memory unit, Spansion, is a joint venture with Japan's Fujitsu Ltd. (6702.TO), and is developing the ORNAND chips.

(MORE) Dow Jones Newswires

03-10-05 0017ET
SOURCE Dow Jones Equity News

03/10/2005