Intel Accused of Cartel Agreement with Retailer

Intel Allegedly Paid Media-Saturn-Holding for Not Selling AMD Products

by Anton Shilov
07/04/2006 | 12:40 AM

The world’s largest chipmaker Intel Corp. may face charges in   Europe, as the company is accused of signing an exclusive selling agreement with Germany’s Media-Saturn-Holding, under which the latter allegedly received millions in exchange to not selling competing products or devices. A news-paper claims that it had seen proofs of the cartel agreement.

According to the European Union trust right, a dominating manufacturer – such as Intel Corp. is – may not have exclusive selling partners. But Financial Times Deutschland news-paper claims that Intel had had an exclusive selling agreement with Media-Saturn-Holding, under which the latter did not sell either processors from Advanced Micro Devices, or any devices, such as computers, which utilized AMD chips. It is claimed that Intel paid “millions” to keep the rival’s central processing units (CPUs) away from MediaMarkt and Saturn stores owned by Media-Saturn-Holding.

While the fact that AMD accused Intel of paying Media-Saturn-Holding between $15 and $20 million for selling only Intel’s chips and Intel-based computers is nothing new, as the company revealed it in its lawsuit against the bigger rival last year, the FTD claims that it had seen a letter from Media-Saturn-Holding regarding the agreement with Intel Corp.

Media Markt, which operates retail stores throughout Europe, accounts for 35% of Germany’s retail sales. According to AMD since 1997 Media Markt has carried Intel computers exclusively.

AMD claims that in the U.S., Intel provides full market development funds payments to retailers, such as Best Buy and Circuit City, only if they agree to limit to 20%, not just the shelf space devoted to AMD-based products, but also the share of revenues they generate from selling AMD platforms. If AMD’s share exceeds 20%, the offending retailer’s marketing support from Intel is cut by 33% across all products, the Sunnyvale, California-based chipmaker wrote in its complain against Intel.

Intel did not comment on the news-story.