The European Commission on Monday disclosed evidences proving that Intel Corp. abused its dominant position on the market to ensure its market share. Numerous companies received special rebates on condition that they would not utilize microprocessors from Advanced Micro Devices.
Earlier this year the European Commission slapped Intel with record $1.44 billion fine for anticompetitive business practices and violation of the region’s laws. The chipmaker said it would appeal and did not admit its guilt. The EC published excerpts from emails of various executives at computer makers which discussed rebates that Intel provided on condition of exclusion of processors from PC makers’ lineups.
According to EC, Intel abused its dominant position in the x86 central processing units 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').
Here are some of the examples that were brought by the European Commission:
- 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".
Other statements from computer manufacturers and MSH outline how the various Intel conditions were an important factor in their decisions not to partially switch to or buy more x86 CPUs from AMD, Intel's main competitor in the x86 CPU market. For instance, in a submission to the Commission, HP stated that it " can confirm that Intel's inducements (in particular the block rebates) were a material factor in determining HP's agreement to the unwritten conditions. As a result (...) HP [Business desktop PC division] stayed at least 95% aligned to Intel."
Intel believes that its business practices are completely legal and that the decision of the EC is wrong.
“Intel is convinced that the Commission's conclusions regarding its business practices are wrong, both factually and legally. Intel has appealed the Commission's decision. We are committed to ethical business behavior and compliance with all applicable laws and regulations governing business practices. Intel has adhered to those standards and acted legally at all times in this matter,” an official statement by Intel reads.