The World of Little Little Bird

From EETIMES

Intel criticizes, AMD applauds Japan anti-monopoly ruling

By Peter Clarke
Silicon Strategies
March 08, 2005 (4:57 AM EST)

MUNICH, Germany — Intel Corp. has criticized a "recommendation" from the Japan Fair Trade Commission (JFTC) relating to Intel's business practices, sent to its subsidiary Intel K.K. AMD has praised the recommendation and called for other regions to punish Intel.

Intel did not specifically refer to the recommendations in a statement but according to reports Intel has been told to take certain incentive clauses out of sales contracts for its microprocessors. Intel has approximately ten days to respond to the Recommendation.

Intel said it continues to believe its business practices are both fair and lawful and that it is evaluating the assertions and the recommendation before deciding next steps. Intel said it was concerned that the JFTC's Recommendation does not appear to take into account antitrust principles commonly accepted worldwide.

"One of the core principles of competition policy is the notion that such policies should be based on sound economics," said Bruce Sewell, vice president and general counsel for Intel, in a statement. "There is a broad consensus that competition regulators should only intervene where there is evidence of harm to consumers. It is apparent the JFTC's Recommendation did not sufficiently weigh these important principles."

According to AMD the JFTC found that Intel negotiated proportions of non-Intel CPUs to be used within particular product families and used advertising support funds as an incentive for Japanese notebook makers to comply.

Specifically, the JFTC found that: one manufacturer was forced to agree to buy 100 percent of its CPUs from Intel; another manufacturer was forced to curtail its non-Intel purchases to 10 percent or less; Intel separately conditioned rebates on the exclusive use of Intel CPUs throughout an entire series of computers sold under a single brand name in order to exclude AMD CPUs from distribution; the mechanisms used to achieve these ends included rebates and marketing practices that includes the "Intel Inside" program and market development funds, AMD said.

The JFTC imposed a number of restrictions on Intel. Among them, it must notify its customers and educate its employees that it may no longer provide rebates and other funds to Japanese computer manufacturers on conditions that exclude competitors' CPUs, AMD said.

"The JFTC found that Intel illegally manipulated the market to exclude competition, hurting PC users around the world," said Thomas McCoy, executive vice president, legal affairs and chief administrative officer for Intel rival Advanced Micro Devices Inc., in a statement. "Using market power illegally to limit innovation and, more importantly, consumers' freedom to choose, cannot be tolerated. We encourage governments around the globe to ensure that their markets are not being harmed as well."

McCoy continued: "The evidence of harm to consumers is obvious. By preventing PC manufacturers from using CPUs of their choice, Intel's misconduct deprived consumers worldwide of the freedom to purchase computers that best fit their needs. Efforts by an avowed monopolist to artificially set market shares to exclude competition clearly violates antitrust standards globally."