14 DAY TRIAL // On Friday, The European Commission served a Statement of Objection against Intel, accusing the biggest computer processor maker of illegal business practices against its smaller competitor AMD. Intel is practically being accused of forcing or making unregistered pays to different European system manufacturers and vendors to use and sell only computers based on its products and drop any present and future contracts with the competing company AMD.
As a response to the Statement of Objection that reached the European Union's juridical arm, the Intel senior vice president Bruce Sewell said, according to InformationWeek: "We are confident that the microprocessor market segment is functioning normally and that Intel's conduct has been lawful, pro-competitive, and beneficial to consumers. While we would certainly have preferred to avoid the cost and inconvenience of establishing that our competitive conduct in Europe has been lawful, the Commission's decision to issue a Statement of Objections means that at last Intel will have the opportunity to hear and respond to the allegations made by our primary competitor. The case is based on complaints from a direct competitor rather than customers or consumers. The Commission has an obligation to investigate those complaints. However, a Statement of Objections contains only preliminary allegations and does not itself amount to a finding that there has been a violation of European Union law. Intel will now be given the chance to respond directly to the Commission's concerns as part of the administrative process. The evidence that this industry is fiercely competitive and working is compelling. When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly".
Simply put, Intel sees no reason to back away from its position of a dominant force on the computer hardware market; moreover, it does not consider said allegations to be of any impact on its position or business practices. While Intel keeps denying the charges of unlawful business practices against AMD on the European computer market, it still has 10 weeks to formally and officially respond to the Commission's statement. In the eventuality that Intel is found guilty of the said charges, the chip producer may be forced to cease some of its European businesses and pay fines and damages to both the European Union and AMD. According to the European Commission's Statement of Objection against Intel and cited by the site Information Week, the company is accused in three cases when it appeared to be anti-competitive. "The first was providing substantial rebates to equipment manufacturers conditional on them obtaining all or the great majority of the processors from Intel.Second, Intel in a number of instances made payments to induce a manufacturer to either delay or cancel the launch of a product line incorporating an AMD-based processor. And finally, Intel offered processors below cost in bids against AMD for customers in the server market", according to Information Week.
"These three types of conduct are aimed at excluding AMD, Intel's main rival, from the market" is the conclusion of the European Commission. "Each of them is provisionally considered to constitute an abuse of a dominant position in its own right. However, the commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anti-competitive strategy". "First, Intel has provided substantial rebates to various Original Equipment Manufacturers (OEMs) conditional on them obtaining all or the great majority of their CPU requirements from Intel. Secondly, in a number of instances, Intel made payments in order to induce an OEM to either delay or cancel the launch of a product line incorporating an AMD-based CPU. Thirdly, in the context of bids against AMD-based products for strategic customers in the server segment of the market, Intel has offered CPUs on average below cost."
AMD on the other hand saluted the Commission's statement. This is perfectly understandable as AMD has a number of lawsuits against Intel across the world, all based on the same unfair business practices. A spokesperson from AMD said that the anti-trust case against Intel is much simpler than the case against Microsoft that is still on the move. "They are two very different cases: one [against Microsoft] involves intellectual property and the other [against Intel] is a straightforward abuse of a dominant position," Jens Drews, AMD spokesperson, said. According to InfoWorld, Drews also said that "It's preposterous to claim to be the guardian of consumers" and that he thinks they( Intel) "overplayed their hand there". "The EU [European Union] action obviously suggests that Intel has, once again, been unable to justify its illegal conduct," said AMD legal affairs executive vice president Thomas M McCoy, who was cited by The Register news site.