Their competitors can’t beat them, the public continue to buy from them, but yet again the European Union (EU) Competition Commissioner has brought the big guns down to size, and this time it’s the turn of Intel to follow a long line of companies (that include the like of Microsoft) and suffer their wrath.
But this $1.45 billion (over £950 million) fine is the biggest that we have seen yet, and it comes as a result of claims suggesting that Intel were using “illegal practices and rebates” to squeeze their main competitors AMD out of the market.
This EU Antitrust fine is the biggest that has ever been imposed and a single company, and although it will be by no means devastating, it’s is still significant and will somewhat tarnish Intel’s record and Intel have unsurprisingly taken exception to this, citing that although they will abide by the laws they object to the decision.
So what are Intel supposed to have done? The EU claim that they have been continually acting to keep AMD out of the market for years through a whole variety of methods that range from immoral to illegal.
Intel were found guilty of paying five separate companies (HP, Dell, Levano, Acer and NEC) secret rebates to only use Intel Chips, to only stock computers that contained Intel chips, and even to deliberately delay and cancel plans to launch products that contained AMD chips; all of these are obviously illegal, and come with heavy fines attached. The companies themselves have been found innocent of any wrongdoing.
However Intel claim that the above acts did not take place, and say that their competitive advantage is purely down to “innovation and competitive pricing” and insist that AMD’s relative failings were purely down to the fact that they were a victim of ‘market forces’ arising from the fact that there are only two main competitors. Bruce Sewell (who holds a senior post at Intel) said that he was ‘mystified’ at the size of the fine saying: “With respect to the fine imposed by the Competition Authority I will only say that the amount is arbitrary,” and that it bears no reflection on any actual proven market ‘injury’ or loss. But don’t think that they will be sweating over the amount – it is just 4.15% of their 2008 turnover.
What their shareholders will be irritated at however is the share price which fell 0.6%, in comparison to AMD’s which rose by 6.4% to $4.62 at the New York Stock Exchange; still less than a third of Intel’s price but by no means a negligible increase.
Having said that it will have little effect on Intel’s financial situation analysts are split as to whether this will affect the overall market: one half say that this show of power by the EU demonstrates their determination to create a ‘level playing field’ which could continue in the same, or even a harsher, manner, whilst the other half think it will not affect Intel’s strategy at all and will not change how Intel operate one iota.
So whether or not this will affect the long term landscape of the microprocessor world it does at least show that the EU are on the lookout, and sends a strong warning to any other company who are thinking of doing the same thing which is definitely a good thing!
Via – Reuters