Monday, September 21st 2009
European Commission Publishes Decision Concerning Intel's Abuse of Dominant Position
The European Commission has today published a non-confidential version of its Intel Decision, adopted on 13 May 2009 ( IP/09/745 and MEMO/09/235 ), together with a summary of the key elements of the Decision. That Decision found that Intel broke EC Treaty antitrust rules (Article 82) by engaging in two types of illegal practice to exclude competitors from the market for computer chips called x86 central processing units (CPUs). These practices harmed consumers throughout the EEA. By undermining its competitors' ability to compete on the merits of their products, Intel's actions undermined competition, reduced consumer choice and hindered innovation. On the basis of a significant amount of contemporaneous evidence and company statements, the Decision demonstrates how Intel broke the law.
Intel abused its dominant position in the x86 CPU market by implementing a series of conditional rebates to computer manufacturers and to a European retailer and by taking other measures aimed at preventing or delaying the launch of computers based on competing products (so-called 'naked restrictions'). The Commission's Decision outlines specific cases of these conditional rebates and naked restrictions, as well as how Intel sought to conceal its practices and how computer manufacturers and Intel itself recognised the growing threat represented by the products of Intel's main competitor, AMD.
Conditional Rebates
The conditional rebates were as follows:
The naked restrictions uncovered by the Commission were as follows:
The Commission found that Intel generally sought to conceal the conditions in its arrangements with PC manufacturers and MSH. For example:
AMD's growing threat
The evidence in the Decision indicates the growing threat that AMD's products represented to Intel, and that Intel's customers were actively considering switching part of their x86 CPU supplies to AMD. For example, in an October 2004 e-mail from Dell to Intel, a Dell executive stated that " AMD is a great threat to our business. Intel is increasingly uncompetitive to AMD which results in Dell being uncompetitive to [Dell competitors] . We have slower, hotter products that cost more across the board in the enterprise with no hope of closing the performance gap for 1-2 years." In a submission to the Commission, Dell also stated that as regards Opteron, " in Dell's perception this CPU generally performed approximately […] better than the comparable Intel Xeon CPU at the time." As regards AMD's Athlon PC CPU, an internal HP presentation from 2002 stated that it " had a unique architecture", was " more efficient on many tasks" , and had been " CPU of [the] year [for] 3 consecutive years".
The fact that AMD had improved its products is also recognised by Intel itself. For example, in a 2005 submission to the Commission, Intel stated that " AMD improved its product offerings dramatically with the introduction of its successful Opteron processor". This is also confirmed by contemporaneous documents from Intel. For example, in a 2004 internal Intel e-mail, it is stated that " Opteron is real threat today… Opteron-based single WS [Workstation] benchmarks beat [Intel's] Xeon in all cases."
Procedure
Before the Commission adopted its final Decision, it carried out a comprehensive investigation of the facts. During the proceedings Intel was able to comment fully on all the Commission's evidence outlined in the Decision. Indeed, the Commission went beyond its legal obligations in safeguarding Intel's rights of defence. For example, despite the fact that Intel chose not to reply to the Commission's supplementary Statement of Objections (see MEMO/08/517 ) by the extended deadline of 17 October 2008 but instead sought to suspend the Commission's case, the Commission took full account of Intel's belated written submissions relating to the supplementary Statement of Objections.
The full text of the decision, together with a summary, is now available on the Europa website here.
Source:
Europa
Intel abused its dominant position in the x86 CPU market by implementing a series of conditional rebates to computer manufacturers and to a European retailer and by taking other measures aimed at preventing or delaying the launch of computers based on competing products (so-called 'naked restrictions'). The Commission's Decision outlines specific cases of these conditional rebates and naked restrictions, as well as how Intel sought to conceal its practices and how computer manufacturers and Intel itself recognised the growing threat represented by the products of Intel's main competitor, AMD.
Conditional Rebates
The conditional rebates were as follows:
- Intel rebates to Dell from December 2002 to December 2005 were conditioned on Dell purchasing exclusively Intel CPUs. For example, in an internal Dell presentation of February 2003, Dell noted that should Dell switch any part of its CPU supplies from Intel to its competitor AMD, Intel retaliation " could be severe and prolonged with impact to all LOBs [Lines of Business]." In a February 2004 e-mail on the consequences of the possible purchase by Dell of AMD CPUs, a Dell executive wrote: " Boss, here's an outline of the framework we discussed with Intel. (…) Intel is ready to send [Intel Senior executive] /[Intel executive] /[Intel executive] to meet with [Dell Senior Executive]/[Dell Senior Executive]/[Dell Executive] . (...) Background: [Intel Senior executive] /[Intel Senior executive] are prepared for [all-out war] 1 if Dell joins the AMD exodus. We get ZERO MCP [name of Intel rebate to Dell] for at least one quarter while Intel 'investigates the details' (...) We'll also have to bite and scratch to even hold 50%, including a commitment to NOT ship in Corporate. If we go in Opti [Dell product series for corporate customers] , they cut it to <20% and use the added MCP to compete against us. ".
- Intel rebates to HP from November 2002 to May 2005 were conditioned in particular on HP purchasing no less than 95% of its CPU needs for business desktops from Intel (the remaining 5% that HP could purchase from AMD was then subject to further restrictive conditions set out below). In this regard, in a submission to the Commission, HP stated that " Intel granted the credits subject to the following unwritten requirements: a) that HP should purchase at least 95% of its business desktop system from Intel …". By way of example, in an e-mail written in July 2002 during the negotiation of the rebate agreement between HP and Intel, an HP executive wrote: "" PLEASE DO NOT… communicate to the regions, your team members or AMD that we are constrained to 5% AMD by pursuing the Intel agreement".
- Intel rebates to NEC during the period ranging from October 2002 to November 2005 were conditioned on NEC purchasing no less than 80% of its CPU needs for its desktop and notebook segments from Intel. For example, in a May 2002 e-mail (when the arrangement was concluded), an NEC executive specified that " NEC will (...) increase [worldwide] Intel market share from [...] % to 80%. Intel will give NEC [support] and aggressive [...] price.".
- Intel rebates to Lenovo during year 2007 were conditioned on Lenovo purchasing its CPU needs for its notebook segment exclusively from Intel. For example, in a December 2006 e-mail, a Lenovo executive stated: " Late last week Lenovo cut a lucrative deal with Intel. As a result of this, we will not be introducing AMD based products in 2007 for our Notebook products".
- Intel payments to Media Saturn Holding (MSH), Europe's largest PC retailer, were conditioned on MSH selling exclusively Intel-based PCs from October 2002 to December 2007. For example, in a submission to the Commission, MSH stated: " It was clear to MSH in this regard that the sale of AMD-equipped computers would result at least in a reduction of the amount of Intel's contribution payments per Intel CPU under the contribution agreements (and thus in a reduction of the total payments received from Intel, even if the total volume of Intel-CPUs sold by MSH would have remained the same as in previous periods), although MSH never actually tested the issue with Intel.".
The naked restrictions uncovered by the Commission were as follows:
- Between November 2002 and May 2005, Intel payments to HP were conditioned on HP selling AMD-based business desktops only to small and medium enterprises, only via direct distribution channels (rather than distributors), and on HP postponing the launch of its first AMD-based business desktop in Europe by 6 months. For example, in an internal September 2004 HP e-mail, an HP executive stated: " You can NOT use the commercial AMD line in the channel in any country, it must be done direct. If you do and we get caught (and we will) the Intel moneys (each month) is gone (they would terminate the deal). The risk is too high ".
- Intel payments to Acer were conditioned on Acer postponing the launch of an AMD-based notebook from September 2003 to January 2004. For example, in a September 2003 email, an Intel executive reported: "good news just came from [Acer Senior Executive] that Acer decides to drop AMD K8 [notebook product] throughout 2003 around the world. We've been talking with them all the way up to [Intel senior executive] 's […] level recently including [Intel executive] , [Intel senior executive] … and [Intel executive]… . They keep pushing back until today, after the call with [Intel executive] this morning, [Acer Senior Executive] just confirmed that they decide to drop AMD K8 throughout 2003 around the world. [Acer Senior Executive] has got this direction from [Acer Senior Executive] as well and will follow through in EMEA [Europe Middle East and Africa region]".
- Intel payments to Lenovo were linked to or conditioned on Lenovo postponing the launch of AMD-based notebooks from June 2006 to the end of 2006. For example, in a June 2006 e-mail, a Lenovo executive reported that: "[two Lenovo executives] had a dinner with [an Intel executive] tonight (…). […] When we asked Intel what level of support we will get on NB [notebook] in next quarter, [he] told us (…) the deal is base[d] [sic] on our assumption to not launch AMD NB [notebook] platform. (…) Intel deal will not allow us to launch AMD".
The Commission found that Intel generally sought to conceal the conditions in its arrangements with PC manufacturers and MSH. For example:
- The rebate arrangement with Dell was not subject to a written agreement but was concluded orally at various meetings. In this regard for example, in a submission to the Commission, Dell stated that " there is no written agreement between Intel and Dell concerning the MCP [rebate] discount, rather, the discount is the subject of constant oral negotiations and agreement".
- There was a written agreement with HP but the relevant conditions remained unwritten. In this regard for example, in a submission to the Commission, HP stated that the " unwritten conditions (...) were stated to be part of the HPA1 agreement by [Intel executive] , [Intel executive] and [Intel senior executive] in meetings with HP during the negotiations;
- The written agreement with MSH contained a provision that the deal was non-exclusive. However, the evidence demonstrates that at Intel's request, the arrangement was in fact exclusive. In this regard for example, in a submission to the Commission, MSH stated that " It was clear to MSH that despite the non-exclusivity clause the exclusive nature of the relationship remained, for Intel, an essential element of the relationship between Intel and MSH. In fact, [MSH executive] recalls that Intel representatives made it clear to him that the changes in the wording of the agreement had been requested by Intel's legal department, but that in reality the relationship was to continue as before, including the requirement that MSH sell essentially only Intel-based computers."
AMD's growing threat
The evidence in the Decision indicates the growing threat that AMD's products represented to Intel, and that Intel's customers were actively considering switching part of their x86 CPU supplies to AMD. For example, in an October 2004 e-mail from Dell to Intel, a Dell executive stated that " AMD is a great threat to our business. Intel is increasingly uncompetitive to AMD which results in Dell being uncompetitive to [Dell competitors] . We have slower, hotter products that cost more across the board in the enterprise with no hope of closing the performance gap for 1-2 years." In a submission to the Commission, Dell also stated that as regards Opteron, " in Dell's perception this CPU generally performed approximately […] better than the comparable Intel Xeon CPU at the time." As regards AMD's Athlon PC CPU, an internal HP presentation from 2002 stated that it " had a unique architecture", was " more efficient on many tasks" , and had been " CPU of [the] year [for] 3 consecutive years".
The fact that AMD had improved its products is also recognised by Intel itself. For example, in a 2005 submission to the Commission, Intel stated that " AMD improved its product offerings dramatically with the introduction of its successful Opteron processor". This is also confirmed by contemporaneous documents from Intel. For example, in a 2004 internal Intel e-mail, it is stated that " Opteron is real threat today… Opteron-based single WS [Workstation] benchmarks beat [Intel's] Xeon in all cases."
Procedure
Before the Commission adopted its final Decision, it carried out a comprehensive investigation of the facts. During the proceedings Intel was able to comment fully on all the Commission's evidence outlined in the Decision. Indeed, the Commission went beyond its legal obligations in safeguarding Intel's rights of defence. For example, despite the fact that Intel chose not to reply to the Commission's supplementary Statement of Objections (see MEMO/08/517 ) by the extended deadline of 17 October 2008 but instead sought to suspend the Commission's case, the Commission took full account of Intel's belated written submissions relating to the supplementary Statement of Objections.
The full text of the decision, together with a summary, is now available on the Europa website here.
182 Comments on European Commission Publishes Decision Concerning Intel's Abuse of Dominant Position
-The ATI buyout won't pay off until the GPU and CPU are one in the same (which was AMD's vision with the buyout).
-By buying out ATI, AMD forced Intel's hand into developing GPU-on-die processors. AMD doesn't have the capital to fast track the developement where Intel does. AMD effectively created competition for themselves when they can't afford to compete.
From those two points, I look at it as either not paying for itself until GPU-on-die processors come out or I look at it as a mistake in the first place. Which is the better answer will only be known if and when it hits the markets. ATI is simply too small to sustain AMD and the x86 industry.
We know you love Intel already, and we know how you think the bastards in the EU are stealing the oh poor boy Intel. HP, Dell and Lenovo are bastard liars and thieves too, because they have so much to gain with their allegations... (??????) And yeah everyone is so against poor Intel. :cry:
Giving the poor excuses as to why the vendors chose to buy only from Intel is LAME. Considering you have some of the proofs on the front page. You might be used to see the legal system making things up in the US (cough* weapons of mass destruction *cough), but this doesn't happen here, sorry. I don't know if this saying is known there or if this is the proper translation but: "Thinks the thief, that everyone is of his condition (nature)."
They got the gating technology from ATI.
They got the EEPROM idea from ATI.
They got the power saving features used in Phenom II from ATI.
They got a CANADIAN engineering team from ATI. :laugh:
Shall I go on?
Was what Intel did legal? BY EU standards, a very definite no. Was what Intel did common? You bet your Intel stock it is. We are playing with billions and billions of dollars here. The fine by the EU was a calculated risk.
We should all be thankful that all it resulted in was people getting a slow or overpriced cpu. Usually this kind of practice has far worse results culminating in a body count. Companies of this size play by nobody's rules and they do not care what the result is as long as there is a profit.
I am not picking on Intel. Their are more than a few multi multi billion $ companies out there that have real blood on their hands and are still doing very well.
Can AMD compete? The first saying that comes to mind is "If you want to play..."
ATIC has the UAE backing it... and AMD owns a decent chunk of change of GLOBALFOUNDRIES... so I doubt AMD is "poor". ATIC would gladly invest $$ into AMD if they were in fact truly in trouble.
ATI and AMD have benefited each other, we can go on about that. Id say more ATI than AMD, because the chipset is really what AMD got from them. Fusion, the first announced and probably first planned GPU on the Chip design probably wont get up in time to compete with Intel. Anywho, Im done with this topic, but thank you all for a very enlightening discussion on this and I thank you all also for your input and points of view.
There is no clean business.
But I'm not sure who exactly gonna benefit from this beside AMD?
Testimony ≠ heresy. You don't need a affidavit signed by the murderer and the victim to certify that you saw a murder taking place.
So now does this mean that AMD can sue intel for compensation? since they had lost alot of money/sales in that time period?
Even if there is a witness to a crime, the defense can question the reliability of the witness (sanity, whether or not the individual was present at the time of the crime, ulterior motives, etc.). Many potential murders have walked despite there being witnesses.
You have no limits as to how far you can go to defend a convicted company just because it is from the US? Shame.Wow I just realized that maybe that's something we had to explain. I thought that everyone here was able to understand that the e-mails were not the proofs themselves, that they just where the reason why the investigation started and subject to validating them through interrogations with the involving parties.
Of course you don't convict someone based on e-mails, but once having them you search the one who wrote it and interrogate him. If he confirms wat it seen there you have a case...
It has nothing to do with it being a US founded/operated company.Again, Intel says we offered rebates, some people go "ooo discount" and other people go "anti-trust." When you're looking at a $1+ billion pot of gold, it's hard not to cry wolf. It's asinine to believe this ruling wasn't made with greed at its core.