Intel To EU: Antitrust Investigation FAIL

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 an attempt to throw mud on the wall and see if anything sticks—Intel goes after 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.


• The Directorate General for Competition (DG-COMP) did not conduct analyze whether 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's scarcely the end of the list; Intel levies a number of separate charges against the EC as well. Specifically, the company alleges that the EC failed to demonstrate a causal link between conditional discounts and the sale of AMD products, and conducted no analysis on the real-world impact Intel's discounts had on customers. Intel also alleges that its ability to defend or exculpate itself entirely was impaired by the EC's decision not to allow Intel access to certain documents Intel thought it desired. The $1.45 billion fine is contested on the grounds that because no causal link could be proven between Intel's discounts, AMD's market share, and alleged consumer harm, the fee is "manifestly disproportionate." It's a bit odd that that Intel used the words "causal link," as such a condition would require that 100 percent of the alleged impact on AMD was caused by "conditional
discounts and the decisions of Intel’s customers not to purchase from that competitor.

Because causality is extremely difficult to prove in anything but the simplest scenarios, courts rely on correlative evidence—hence the phrase "reasonable doubt."

Some of the complaints Intel is leveling, such as access to documents held by the other party, are complaints over differences in the judicial systems of the US and the EU. One of those differences is the fact that in the European Union, the plaintiff does not have to prove that customers were in some way harmed by the actions of the defendant. It's enough to establish that the defendant's actions, even if they didn't directly affect citizens, blocked or reduced the plaintiff's access to the market.

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

Intel's argument attacks the validity of DG-COMP's AES test from several angles. First, Intel claims that the EC "fails to prove that Intel’s rebate arrangements were conditional upon its customers purchasing all or almost all of their x86 CPU requirements from Intel." While Intel acknowledges that an AES test was conducted, it also claims that the EC "commits numerous errors in the analysis and assessment of the evidence relating to the application of that test." Put more concisely, Intel is asking for an annulment of the fine because the DG-COMP's office is run by a bunch of blithering idiots.

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. The one trial that could award damages begins this spring. If you're interested in perusing the text of Intel's claim, it's over here.