Intel Fined A Record $1.45 Billion By EU

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News Posted: Wed, May 13 2009 9:14 AM

Boy, those suits in the European Union sure know how to dish out the fines. Just over a year after the EU ordered Microsoft to pay fines totaling $1.3 billion for withholding critical information from developers, the same entity has come forward and slapped Intel with a record-setting fine of $1.45 billion. Talk about unceremonious record breaking!

The report states that Intel has been found guilty of "offering improper rebates and other discounts to discourage companies from buying microprocessors from its smaller rival, Advanced Micro Devices," and clearly European regulators don't take too kindly to those types of actions. It's suggested that Intel used its dominant position in order to strongarm others and prop itself up illegally, and after two full years of EU investigation, the quiet complaints from AMD have finally led to this.



"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."



We're told that the violations took place between 2002 and 2007, a time in which 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" according to the Commission. Big names such as Dell, HP and Lenovo were all said to have been offered these types of deals, though curiously, no mention was made of punishment for those firms that took Intel up on their offer. Obviously, Intel's not exactly taking the news in stride -- just have a look at an official statement put out early this morning by its President and CEO Paul Otellini, which obviously states that Intel will appeal the ruling:



"Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace – characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal."

"We do not believe our practices violated European law. The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not. The Directorate General for Competition of the Commission ignored or refused to obtain significant evidence that contradicts the assertions in this decision. We believe this evidence shows that when companies perform well the market rewards them, when they don't perform the market acts accordingly."

"Intel never sells products below cost. We have however, consistently invested in innovation, in manufacturing and in developing leadership technology. The result is that we can discount our products to compete in a highly competitive marketplace, passing along to consumers everywhere the efficiencies of being the world's leading volume manufacturer of microprocessors."

"Despite our strongly held views, as we go through the appeals process we plan to work with the Commission to ensure we're in compliance with their decision. Finally, there should be no doubt whatsoever that Intel will continue to invest in the products and technologies that provide Europe and the rest of the world the industry's best performing processors at lower prices."




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acarzt replied on Wed, May 13 2009 9:31 AM

I think this is kind of ridiculous... You're gonna fine a company for being successful? That's just stupid... So what if Intel was offering rebates to companies for buying their product? Why didn't AMD do the same thing? Maybe they did, but Intel had the better deal and the better product... From 2002 until about 2006 AMD had better CPUs... Intel already had the majority of the market at this time... BUT AMD made a lot of ground in this time. But then Intel launched Conroe and ever since then AMD couldn't compete. I don't know about you, but i've never even seen an AMD commercial... I see intel all the time. When I was selling PCs at Circuit City, a lot of people had never even HEARD of AMD. They wanted intel because they knew the name. I had to explain to people how the AMD chips were better. And still they didn't quite get it because they saw 3Ghz P4s vs 2Ghz Athlon64s and they didn't understand how something with a lower clock speed was faster lol. It's AMDs own fault for not marketing their products well enough. Not everyone is going to go out and get their own facts about a product like the folks here. You can't punish Intel because AMD didn't have a good enough business plan.

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Fudge replied on Wed, May 13 2009 11:22 AM

That's is some stupid lawsuit =\

Basically they're fining Intel for offering better products for lower prices. Ugh, hey guys from the EU, ever heard of COMPETITION? Marketing? Business? AMD could do the exact same thing that Intel did, compete with them in the price range and try to compete product-wise.

Thing is they didn't, Intel, in the past few years, just did much, much better than AMD and for much more reasonable prices lately. AMD was once the cheap but clever, and ultimately better bang-for-the-buck competitor. If they complained to the EU that Intel are unfair in the aspect of their marketing, then that just shows us that they simply can't compete any more.

I would very much like to see Intel appeal and win.

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3vi1 replied on Wed, May 13 2009 12:36 PM

This isn't stupid at all - do some investigation beyond Intel's side of the story.

Basically put, they abused their majority share to force other companies out of the stores. "We make up 95% of your business sales. Quit selling systems with AMD processors, or we'll start charging you more for Intel processors AND Intel motherboards - while you try to compete with the store down the street getting our discounts."

It wasn't just AMD that got pissed of and started the investigation: It was the vendors that Intel was strong-arming too. Gateway, for instance, said that Intel has "beaten them into 'guacamole" in retaliation for offering AMD chips.

And, despite what Intel is quoted as saying in TFA, the European Commision did find that Intel charged below-cost for server processors. That's the game you play when you're much wealthier than the little guy and you want to see who runs out of money first.  That's not "competition", that's abuse of market position.

The EC's not the first to call Intel out on this either. Japan slapped them down for the same thing about 4 years ago, and Intel only changed their practices in that country.

Anyone who's familiar with my views knows that I'm no AMD fanboy (my two latest systems use Intel processors), but having continually read of Intel's practices over the last 7 or so years I agree this was fully warranted.

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

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Super Dave replied on Wed, May 13 2009 12:36 PM

Could it be possible that AMD had some legitimate complaints afterall?

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acarzt replied on Wed, May 13 2009 1:21 PM

Speaking of such practices... what about Wal Mart? lol Those guys are total douche bags from what i've heard.

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The EU I think goes a tad overboard sometimes.... If they keep this up not many Big companies will want to sell items there..

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Super Dave replied on Thu, May 14 2009 12:26 AM

If this award stands it would seem that Intel has a new 'tax': The Intel Dirty-Deeds Tax. I wonder who is going to pay this new tax!Confused If you are struggling to figure this all out, take a look HERE. Unfair trade practices affect all of us consumers! 

 

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acarzt replied on Thu, May 14 2009 11:39 AM

Dave... the answer to this question is the same as the answer to your question the other day about their advertising... lol

The consumer!!

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Drago replied on Thu, May 14 2009 2:45 PM

Well if the Tax bothers you so much, just buy AMD. TBH this ruleing is good in several ways, it makes intel admit to what they have done and they are being held financially responsible because of it. What they have done in the past has hurt consumers, cut out competition, and allowed Intel to maintain dominance, even when its Pentum 4's and Pentium D chips were getting the snot kicked out of them by Athlon 64 and X2 chips.

Did you guys forget that Dell was found guilty of accepting Intel's offers to only get intel chips, and the US gov forced Dell to at least sell and offer AMD based computers since Dell had become so big they were practically a monopoly in the computing segment and since that was the case with them only offering one chip from one manufacturer it killed competition. Not only did Dell get nice big breaks on paying for Intel chips, but they did not pass those savings onto the consumer, they just sucked in pure profit.

Intel has many guns on it for monopoly practices in many different countries around the world. I hope this is just the start of the beating Intel needs to recieve. Really without AMD and their Athlon, and Athlon 64 and Athlon 64 X2 chips, Intel never would have had to gotten off their *** to make the Core2 series of chips. Without competition, stuff stagnates, just look at Nvidia, still using cards based on the G92 chip that has been around for 3 years cause their competitor cannot even come close to holding the performance crown. The thing that Nvidia is doing right is that they are still inovating and making new gfx stuff, even if they are just refreshes and little tweaks on some things, but on others they are innovating, while it took AMD kicking Intel's butt for them to attempt a comeback.

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Today's LA Times mentions that the ramifications of this judgement may soon cross the Atlantic and spur the US to take similar sanctions (read HERE). Could this double The Intel Dirty-Deeds Tax?Surprise

 

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I think the EU can go far sometimes, but I feel that Intel deserves this.

Hello

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Super Dave replied on Fri, May 15 2009 12:40 AM

Let's see: $1,450,000,000 + the unknown lawyer's fees (X) divided by the number of CPU's to be sold (Y) over an unknown period of time (Z) = The Intel Dirty-Deeds Tax. Any mathematicians out there? The equation I arrived at is:

(1,450,000,000+X)/YZ= $$$

While you may choose to pay this tax, let's not forget about the folks that unknowingly got soaked in the past! Now we know why Dell didn't offer AMD processors during those years! Thanks, Intel. 

 

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Intel is a dirty dirty company. Why do you think when AMD was kicking Intels buts with the Athlon 64 and x2s vs Pentium 4 and Pentium Ds AMD hardly gained any market share. If they are left unmarked then there will only be Intel CPUs and that is not good for anyone, but Intel.

They harm the PC industry more than help in some cases. Look at the GPU market. You could hardly find a PC under $1000 with anything other than a Intel GPU in it for years. How much has that hurt the PC gaming market? 

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