Intel To EU: Antitrust Investigation FAIL

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News Posted: Wed, Sep 16 2009 5:44 PM
Intel announced it intended to appeal the EU's decision to slap it with a $1.45 billion fine; the text of the company's request for annulment is now available in the Official Journal of the European Union.The Santa Clara-based company's request is best understood as anattempt to throw mud on the wall and see if anything sticks—Intel goesafter the decision from all angles.

In its petition, Intel claims the following:
  • The conditional discounts Intel offered its partners were not proven to have affected competition.

  • TheDirectorate General for Competition (DG-COMP) did not conduct analyzewhether Intel's actions had a material effect on consumers, and

  • The EC failed to consider whether or not Intel's rebate program affected EU citizens or were implemented in EU territory.
That'sscarcely the end of the list; Intel levies a number of separate chargesagainst the EC as well. Specifically, the company alleges that the ECfailed to demonstrate a causal link between conditional discounts andthe sale of AMD products, and conducted no analysis on the real-worldimpact Intel's discounts had on customers. Intel also alleges that itsability to defend or exculpate itself entirely was impaired by the EC'sdecision not to allow Intel access to certain documents Intel thoughtit desired. The $1.45 billion fine is contested on the grounds thatbecause no causal link could be proven between Intel'sdiscounts, AMD's market share, and alleged consumer harm, the fee is"manifestly disproportionate." It's a bit odd that that Intel used thewords "causal link," as such a condition would require that 100 percentof the alleged impact on AMD was caused by "conditional
discounts and the decisions of Intel’s customers not to purchase from that competitor.

Becausecausality is extremely difficult to prove in anything but the simplestscenarios, courts rely on correlative evidence—hence the phrase"reasonable doubt."

Not pictured: The US judiciary system

Someof the complaints Intel is leveling, such as access to documents heldby the other party, are complaints over differences in the judicialsystems of the US and the EU. One of those differences is the fact thatin the European Union, the plaintiff does not have to provethat customers were in some way harmed by the actions of the defendant.It's enough to establish that the defendant's actions, even if theydidn't directly affect citizens, blocked or reduced the plaintiff'saccess to the market.

One of the EU's benchmark tests todetermine the existence or absence of anti-competitive behavior is an"as efficient competitor" or AES test. The EU recently updated its ownguidance on exclusionary abuses, the PowerPoint is over here. An AEStest examines market conditions, prices, and changes against aso-called "efficient competitor." The point of the analysis is todetermine whether or not a company's situation (AMD, in this case) is aresult of its own inefficiency, or due to the actions of a larger, morepowerful competitor. The EU officials who performed that test obviouslyfelt Intel was twisting the market to favor its own goals.

Intel'sargument attacks the validity of DG-COMP's AES test from severalangles. First, Intel claims that the EC "fails to prove that Intel’srebate arrangements were conditional upon its customers purchasing allor almost all of their x86 CPU requirements from Intel." While Intelacknowledges that an AES test was conducted, it also claims that the EC"commits numerous errors in the analysis and assessment of the evidencerelating to the application of that test." Put more concisely, Intel isasking for an annulment of the fine because the DG-COMP's office is runby a bunch of blithering idiots.

Regardless of whether Intelwins or loses its appeal there's a certain irony in the fact that AMDwon't see a cent of the $1.45 billion fine. The one trial that couldaward damages begins this spring. If you're interested in perusing thetext of Intel's claim, it's over here.
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ClemSnide replied on Wed, Sep 16 2009 6:31 PM

>Not pictured: The US judiciary system

Giggle, snort. I wonder, though, if the fine is upheld, will Intel merely cease sales to Europe (which may cause a minor stir) or grumble, dig into petty cash, and come up with the bribe?

My own compromise solution would be to offer solid gold "Intel Inside" case badges; but you know me, I'm way ahead of my time.

"I didn't cry when Bambi's mother was shot... but I cried when HAL was turned off."

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Joel H replied on Wed, Sep 16 2009 6:42 PM


Oh, they'd pay it. That's basically what--between 1/5 and 1/7 their quarterly profits? That's the oddity--the biggest penalties the EU can slap, and companies shrug it off.

I think the negative PR is probably worth more than the cash.

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3vi1 replied on Wed, Sep 16 2009 7:10 PM

>> Regardless of whether Intel wins or loses its appeal there's a certain irony in the fact that AMD won't see a cent of the $1.45 billion fine.

How so? The fine is to make abusive business practices less attractive to Intel, not to be a special award to just a single one of their competitors.

If Intel were to threaten to take their ball and pull out of Europe, look for AMD stock to shoot through the roof. So, that'll never happen.

What part of "Ph'nglui mglw'nafh Cthulhu R'lyeh wgah'nagl fhtagn" don't you understand?


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ClemSnide replied on Thu, Sep 17 2009 5:57 AM

Yeah, I know, a check will be written. <old joke>(This being Intel, it's likely to be for 1.44999999 billion.)</old joke>

I just wanted to momentarily imagine the chaos that such an announcement would cause! Sigh.

"I didn't cry when Bambi's mother was shot... but I cried when HAL was turned off."

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realneil replied on Thu, Sep 17 2009 8:36 AM

They have been getting away with not playing nice for a long time.

They'll never change, they'll just cover the bases better.

Dogs are great judges of character, and if your dog doesn't like somebody being around, you shouldn't trust them.

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