South Korean investigation finds Intel violated antitrust laws

It wasn't all that long ago that the European Commission slapped Intel with some fairly significant antitrust charges, and it now looks like South Korea is set to do the same. According to Business Journal, after a two-year investigation, the country's Fair Trade Commission has concluded that Intel did in fact violate South Korea's antitrust laws, in particular by offering rebates to computer makers in order to sway them away from rivals like AMD. While there's no word on what penalties Intel might face just yet, Business Journal is reporting that sanctions should be decided by the FTC by October.

[Andir3.0 @ Sep 11th 2007 12:20PM]

But does it play Doom?


(Sorry, it's just that I haven't read that in so long and I kind of missed it.)

[Charlie Calhoun @ Sep 11th 2007 10:31PM]

Yes, it does play Doom. Good old Intel.

[qtip @ Sep 11th 2007 12:24PM]

I enjoy Intel's CPUs and I think they are cranking out some really good products, but I have zero tolerance for this kind of behavior. If true, Intel should be fined HEAVILY.

[Andir3.0 @ Sep 11th 2007 12:30PM]

True that. I really don't think anyone should be given leeway in cases like this. Especially (and even) if they are the de-facto standard.

[Matt @ Sep 11th 2007 12:33PM]

Sorry, i just don't understand how rebates = monopoly/trust... I mean they are kindof a pain in the @$$; filling out the form, mailing it, waiting 8 to 45 weeks for a check that might not ever come. But seriously isn't South Korea covered up with chip makers? How can anyone be accused of building a "trust"?

[Andir3.0 @ Sep 11th 2007 12:36PM]

Rebates from not using a competitor is anti-trust. It's not about building trust. It's about trusting the company to act as a competitor and produce quality competitive products. Not compete in business by abusing (using) it's monetary power to discourage competition.

[John @ Sep 11th 2007 12:37PM]

The rebates were for computer manufacturers, not consumers. Intel was offering monetary incentives for manufacturers to use their chips.

[andrews @ Sep 11th 2007 12:40PM]

How is that any different than offering a lower price? Is offering a low price considered monopolistic? I think not!

[Totalfixation @ Sep 11th 2007 12:41PM]

I Don't believe its that kind of rebates. Anti trust laws are placed only make sure that one company doesn't have complete power over there competitors. In this case, Intel had some heavy power over manufactures that used Intel CPUs. Hindsight, there doesn't seem be anything wrong with giving a little rebate to any company(ies) that sells Intel CPUs, but by saying if we give you this rebate you cannot use AMD CPUs is another thing. Plus if a PC manufactures that sold the same amount of Intel chips while also offering AMD chips would get less benefit from Intel compared to a company that sold the same amounts of Intel chips but not selling any AMD would get a better price from Intel. Now tell me that isn't some BS?

[Justin @ Sep 11th 2007 12:44PM]

because in order for the manufacturers to get rebate, they have to agree to certain conditions. e.g. not using AMD's chips. although it's usually done in a more subtle way... for obvious legal reasons...

[dagamer34 @ Sep 11th 2007 1:01PM]

The rebates were tied to selling more Intel chips and not using any AMD chips, very similar to how Dell had a sudden change of hart last year when Intel found a new whipping boy (Apple). The rebates stopped flowing, and Dell had to start using AMD chips to stay competitive. Interestingly enough, Dell also lost it's #1 computer maker in the same time too and some CEO shuffling. All coincidence? I think not!

[Matt @ Sep 11th 2007 1:01PM]

Sure, but don't businesses do that all the time? Is that not what partnerships are all about? I agree that they shouldn't "bully" other companies by targeting specific competitors (eg. if you DONT buy AMD you get a discount), but for exclusively using their products (eg. if you only use Intel you get a discount) I think discounts are ok. Thats how you create a competitive advantage, right?

[Andir3.0 @ Sep 11th 2007 12:45PM]

"Is offering a low price considered monopolistic?"

It is if you only offer that lower price to companies that promise not to use a competitor.

[insertAlias @ Sep 11th 2007 3:24PM]

So how's this different than exclusive contracts? You get a lower price if you agree to buy only from me...This is done all the time (its the reason that I can't buy a Coke anywhere on my college campus, they have an exclusive deal with Pepsi). This seems like business as usual to me.

[Rob @ Sep 11th 2007 1:43PM]

Ain't that a surprise. All these corporations have their hands dirty with corrupted practices. I guess is the name of the game when you become so large.

[Tai @ Sep 11th 2007 3:28PM]

Excuse me-

(inserts a dime…one nickel and three pennies returned)


As I’ve read through most of your comments I couldn’t help but think; how does this affect us? (Us meaning Engadget readers). Don’t get me wrong, I see the obvious problem with companies agreeing not to purchase/use another product in turn for some type of compensation.

My question is this: Shouldn’t this type of agreement have positive impact to the end user?

I see it on two fronts-

1. The Joe at the pc store who doesn’t know about computers shopping for one will get a pc that does what he wants it to do and at what I imagine would be a less than what it would have been had the two companies not have the agreement.


2. The enthusiast who wants to build his own system compares the costs and performance of the two chipmakers and settles on the chip that delivers on his needs for the cheapest price.


The base line assumption is this: The agreement guarantee’s the sell of product. The benefit of Intel knowing that company X is going to purchase Y product for $$ amount allows them to focus on other things R&D for example as opposed to spending money marketing products. The benefit for the PC manufactures is now they have an all but guaranteed supply of product, which decreases build times and allows them the opportunity to focus on other things as well, customer service for example.

I’m not saying that these actions are right, this is how I first viewed the situation..


Your thoughts?

[Andir3.0 @ Sep 11th 2007 4:23PM]

The problem occurs when Company A is the only company left, and they start patenting and or buying out every building or plant that can manufacture said products. They then jack the price way up and your kids now have to pay a premium price for something that will never change until the monopolistic company decides to change it.

When it all boils down, it's the consumer that has the most control over this. If the consumer is informed of these bad practices, they can make a well informed decision on the company they are buying from.

[Brian @ Sep 11th 2007 2:39PM]

Honestly I don't know how any company manages to fenagle the legal intricacies involved with international trade. Obviously this isn't the best example, since bad is bad, but hearing stories like this really kill my interest in doing business in more than one country.

[call-me-tonight @ Sep 11th 2007 4:13PM]

This is mine fifty-seventh attempt at educating the public...

First off, I see myself as loyal to either Intel or AMD, they are just companies that sell stuff. I use an Core Duo laptop and a Athlon X2 desktop.

Q1: isn't this typical behaviour for businesses?
A: at small scale, where there is healthy competition, it's probably okay to sign exclusivity deals. But these allegations refer to the time where Intel was clear definitely undoubtedly the monopoly on the market. It is a very wrong thing to do as a monopoly. The original AT&T was broken up due to similar reasons.

At the time (and even present) Intel has a lot more money in the bank than AMD, and it essentially said to the retailers/box assemblers that unless they use exclusive Intel chips, they are going to face higher costs and delayed shipments. They used words like "incentives" and "rebates", but it just meant that if you sell AMD chips, you have to pay more for Intel chips than other sellers who are on the Intel boat.

Q2: How does this matter to customers?
In the short run, there is less competition in the market. Customers couldn't easily buy machines with cheaper (and sometimes better) AMD CPUs. Athlon MP had very limited uptake in the market, despite clear performance advantage and much much cheaper than Xeon processors for a significant period of time was basically due to this reason.

In the long run, if the practice is continued, the marketplace is not healthy for competition, and Intel would eventually starve AMD to death. After which, they would simply raise the price of the processors, to "recoup" the money they spent on the "rebates" and "incentives", which would no longer be necessary, as there will be no more viable competitors. And in the end, it's the customers who are going to pay for this.

The situation has changed since AMD brought the charges, and Intel has gradually withdrawn their rebate schemes from the market, which means we now see AMD CPUs in virtually all major PC manufacturers, not to mention very cheap and capable CPUs. Plus, if Intel had its way, the dominant 64-bit CPU out there today would most likely be the Itaniums, which is expensive to make and complicated to code for.

Don't thank AMD, they are just doing what they can to survive. But be glad that there is now healthier competition in the market, which is the only situation where the consumers can benefit.

[Nick J @ Sep 12th 2007 12:34AM]

To put it into perspective.... so far its only preliminary allegations which do not themselves amount to a finding that there has been a violation of Korean law. So the headline of this story is factually incorrect.