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
@Benet the mods know who you are man. If you want to stay I would clam down.
What I see happening here is an appeal happening. This will likely be tied up for awhile. Also, does the fine mean the companies have to pay? If not I suppose they wont be able to sell in that country(ies). Im more interested in seeing the the U.S. and the FTC find out and how they proceed.
Yes, I too would be interested to know what means of enforcement the EU is capable of.
4:1 odds say the FTC will find little or no guilt on behalf of Intel. The rebates were that of normal business conduct and do not allude to anything that falls under anti-trust law. The FTC may advise monopoly holders to refrain from using rebates, however.
And how does it feel when your government is put to question, hey? How if you step back a bit too, read the thread again and target all those wise (because they are wise) comments at the people that really needed them from the beginning? At no moment I have insulted a member of this forum, I have "insulted" your government however, with the sole idea of prvoking a response like the one you made, because you can't understand my point of view, unless you feel the same. Ford's and Themailman's ONLY argument in all the thread has been that the EU government is corrupt and has done this to steal money from Intel.I'm grown up, so don't worry for me, but let's be open about this. It's been more than 1 week since I contacted the mods and told them the reason why I registerd (long story made short: an experiment). I decided to stay as long as they wanted. They are suposedly evaluating the situation. I didn't say anything because I wanted to let in their hands the decision to make it public (not directly, but giving me green flag). If they were going to ban me, they might not want it to go public, but at this point I'm more concerned about being open with the TPU community, than with the mods.
That being said, I'm DarkMatter.
I'm open to suggestions as to how you have to express it when you think that someone is confused and making false claims because of that, being that what I said is apparently an insult. Just in case it has not been done yet, I'm going to report my own post to the mods. I have nothing to hide.
Just some friendly advice.
Also just to let you know I have NOTHING against Europeans or any culture for that matter. What I hate is our current governments. Mine included. Ever heard the term "I love my country but hate my government"? So I'm not sorry if insulted the EU. However you should hear the crap I talk about the US government. To be honest I HATE the EU. I think its robbing a lot of countries of their solitude.
Second, I didn't insult anyone. Be clear about where and how otherwise. Calling BS is not insulting in my book, not according what BS is in this context.
According to the wiki:I have always considered that meaning when speaking about news, facts, etc...
Let's continue anything off-topic, through PMs.
@FordGT90
I still think that everything you have been saying is BS. The BS described above. And that's my opinion.
I think you're just an anti-Eurite, to be honest. Perhaps you had a bad experience with a croissant as a child.
btwhow inferior?
AMD Opteron beat the Intel Xeon (2003)
AMD Athlon 64 beat the Intel Pentium 4 (2004)
AMD 780G Chipset beats the crap out of Intel G45 Chipset (2008)
AMD has superior graphics, Intel has craptics
ALL current Intel CPUs have AMD64 microcode also known as EMT64, Intel 64 or x86-64
en.wikipedia.org/wiki/X86-64
thats why you can have more than 3GB memory
AMD's HyperTransport from 2003 is far ahead of its time, intel copied it with their QuickPath, and HT is still used TODAY!
kinda fun for you to say AMD is inferior when CLEARY your blind, if it wasnt for Intel blocking AMD out of the market, AMD would have had atleast 40-50% market share by now
Perhaps there was eurite in your croissant.
Benet, I dont remember Dark Matter off the top of my head so you will have to excuse me. Thanks for saying my words were wise, not sure if they were but thanks none the less. Yes you did insult, maybe not in the words I said but you did. My government is anything but perfect but still my government, so I see why you responded the way you did.
Back to the topic, there is certain to be backlash at all of this, and I do feel like this is nerd rage, even though I am not one :Rofl:
its like coca-cola limiting pepsi to 5% etc
What Intel did is manipulate the free market, which is wrong.
....You know when Coca Cola made Coke? or new Coke as it was often called (which I loved by the way, compared to the original before they went back to Classic. I remember this in the 80s and I was a little Jason, ha ha) was that when Pepsi started over taking them, based on taste tests (remember those taste test commercials) Coke had to reformulate and rethink. So they went to the drawing board (which companies should do) and tried to reinvent Coke. Pepsi had the taste, sweetness, etc that Coke was lacking and Consumers started choosing it. Coke tried to immitate that, but apparently, it was poorly received (I have no idea why because Coke and Coke 2 were/are awesome) and Coke went back to the Classic formula (which is delicious and a nice break from PEpsi, which I do love). Anywho, I just had to throw that in there and semi-hijack the thread. I apologize.
1. It's not fishy to me at all. First of all there are lot's of evidences here, plus many many others that are never going to be public, because those are the testimonies of the executives involved. Just because a bunch of e-mails is everything we got, I don't know how you assume there's nothing more. They can't tell who gave their testimony, because Intel and even their respective companies could retaliate. Also the fine is small, very small in comparison to what the law permits and considering the charges it could very well have been greater. The law says a maximum of 10% of annual revenue AFAIK. That would have been around $4 billion max and more than $2 billion considering the charges. Also that law has not been invented for Intel, many companies have been convicted under this law and all of them paid and probably proportionally much more than Intel. Intel crearly obtained a better treatment on this one, because they are big.
2. They didn't benefit in comparison to the prices that Intel would have needed to offer them in a free market situation. They just didn't. It's the example of the gun on your head all over again. Of course you benefit from giving all your money and keeping your life instead, but nothing hides the fact that they never gave you the better deal you could have: keep your life and your money.
3. Means that a thief thinks that everyone is a thief, I said this not calling you a thief, but as a reference that what you have seen on your gevernment doesn't happen everywhere. Your government might be a thief, and sure as hell that mine is too, but that doesn't happen in such high levels, and you wouldn't involve US companies like HP, Dell. If they wanted 1 billion they don't need to do anything special like that. They can just charge us a 0,5% more and that's it, they would get that billion and then some. No one would complain about a 0,5% when the budget has been increased a >>>5% every year, I think now stands at about 150 billion euros. They could increase foreign company's operation costs... There's a lot of things they could do to get a billion, other than fining Intel, because they spend more than that billion every year, looking for anti-competitive cases and proofs. Also take into account that Intel will pay that billion by installments, so it's a very small amount of money compared to what they could get in a less public maneuvre.
PD Maybe I'm wrong, but I remember reading that 40% of the fine was going to AMD for damages and some more to other affected companies.