Intel fined record $1.45 billion in AMD antitrust case
By Thomas Ricker 
posted May 13th 2009 5:32AM
posted May 13th 2009 5:32AM
Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years.Intel was ordered to cease the illegal practices immediately and has three months from the notification of the decision to pay up. Of course, Intel will appeal and this will drag the litigation on for years as did Microsoft. Regardless, we'll bet that AMD, who raised the complaint against Intel back in 2000, will be celebrating come dawn in Sunnyvale.
Update: Intel has issued a formal response to the ruling saying that the commission "is wrong and ignores the reality of a highly competitive microprocessor marketplace," and that its practices have caused, "absolutely zero harm to consumers." Oh, and it will <gasp> appeal the decision. Hurrah for corporate lawyers!
[Via Canada.com]
Ouch
$1.45 Billion's worth of ouch.
Double Ouch!
humiliation!
Totally worth it. The world is now a better place to live.
I remember when I assembled my PC in 2005, I used AMD. I mean, for the same price, AMD was better, produced less heat, consumed less power but still couldn't understand why isn't it gaining any market share.
I'm seeing a lot of Intel hate, but let's not forget, bribes only work when someone is willing to take them.
Not seeing a lot of info about the companies who actually held back competition by only selling Intel chips.
When we find a corrupt politician we usually punish them, along with the person who bribed them.
The Commission established that between 2002 and 2007, Intel paid PC makers and retailers to favour its products over those made by AMD. It found that Acer, Dell, HP, Lenovo and NEC had been given rebates if they promised Intel exclusivity. Media Saturn, owner of Europe's biggest consumer electronics retailer Media Markt, had also been given money to only sell computes based on Intel's chips.
Not only did Intel provide rebates to vendors who would not use AMD products, it also paid unnamed vendors to postpone or cancel the launch of products based on AMD chips.
"Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years," said Competition Commissioner Neelie Kroes. "Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated."
Is it an error in the article where it says AMD filed suit against Microsoft?
"Regardless, we'll bet that AMD, who raised the complaint against Microsoft back in 2000, will be celebrating come dawn in Sunnyvale."
It would be so funny if companies who got f-ed up fines from the EU would just take their toys and go home. EU countries would be stuck with a lot of 2nd rate garbage. Out of curiosity, does any company that gets taken to court by them ever win? And if they win, does the EU cough up money for time wasted?
@blacky
I have no doubt that intel did what it was accused of, half the reason for becoming market leader, is the ability to abuse the position.
I'm just wondering why we aren't seeing huge fines levied at Acer, Dell, HP, Lenovo and NEC, for taking intel's money and actually stifling amd.
In this case all intel can do is hold out a bag full of money, some other company has to actually take the bag and shut the door in amd's face.
@blacky
So Intel has harmed millions of Europeans with its practices, my question is where is the 1.4B going? To the people harmed because they couldn't buy an AMD powered box and had to buy a Intel one, doubt it. Its probably going into the coffers of EU countries.
Lets just say for example over the 5 year period there was 50 million people that wanted to buy an AMD box but couldn't. That's just a completely off the top of my head count of 10 million a year could be a lot more, could be a lot less. If you take that 1.4B and divide it among the "affected" persons that's $28 a person. After legal fees and red tape of tracking down the affected people they are probably gonna get $10 tops. What has this actually done for the affected people and that's IF they even pay out any damages too them at all?
Not really ouch, intel's net worth is well over 450 Billion. So more like a very small damn!!
There are right now about 499 million EU citizens, compared to the 306 million US citizens, so I conclude that taking a random number like 50 million in kal326's example might be a bit off.
It also means it's economically unimaginable to pull out of the EU market just because you got caught not playing by the rules and have to pay a fine, they sell 30% of their computer chips in the EU, and they sold for $38.8 billion in 2007 to get a baseline, that comes to 11.64 billion sold in the EU, in 2007
And when they wrote off billions of profit to be childish about it I think the stiockholders would have something to say about that, stockholders who obviously aren't all american either, not that american stockholders are not looking out for their own wallet, and would support throwing a tantrum because they got caught breaking rules they knew were there.
And they could according to the rules have gotten a max fine of 10% of their annual global turnover, which was $38.8 billion in 2007, and that for each year of infringement, which would be in say 5 years more than 15 billion bucks easy (some years they sold less I'm guessing), so they are saving 13.5 billion at least with this ruling you could argue :)
@blacky I struggle with a lot of what is labeled as anti-competitive these days. Are exclusivity contracts really illegal? I guess it might depend on the terms, but it's not like this was a one sided contract, both the hardware assembler, HP, Dell, etc, was better off through reduced pricing, and Intel benefited from higher volumes. I'm an IT consultant, and while I don't have an explicit exclusivity contract with my clients, I do offer discounts based on contract length. If I hinged that on being the exclusive provider of IT service for them, am I guilty of anti-competitiveness as well?
@Ellianth
The EU is the world's largest economic unit (see: http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal) ). No international company would dare turn its custom down. If Intel did that, the lost sales would cost the company far more than $1.45Bn, and the share price would fall off a cliff, causing massive personal losses for the executives.
Oh, and the EU didn't just summon Intel in court and fine them. AMD presented a case to a panel of EU judges, Intel did the same, and the evidence suggests that AMD's claims were correct. AMD sued Intel, the EU didn't sue Intel. However, damage was done to Europeans (and AMD, but they don't get anything), so the EU collects the fine.
1.45 billion bag of hurt
Damn straight... That's about 1/7th of Bill Gates annual income (7.8 Billion)
@Ben: The difference between you and Intel regarding exclusivity contracts: I don't think you have >50% market share, do you?
They may make small chips, but that fine isn't small potatoes...
According to HotHardware, Intel made ~$650M net profit last quarter. Assuming that didn't change much, the fine is a bit over half of a years *profit*.
It's not a small fine, but it's probably nowhere near what AMD lost through five years of Intel's dirty tricks.
Don't blame AMD's incompetence purely on Intel's suspect (illegal) strategies.
The acquisition of ATi was poorly executed and lost significant amounts of money for years. Hector Ruiz took pay rises even though AMD had seven consecutive quarterly losses.
AMD still have no direct competitor to the Atom. They missed the netbook boat. AMD have hardly penetrated the notebook market because they lacked a solid platform to compete with "Centrino". Finally they have come up with "Puma" and solid discrete graphics but they are still behind. Having to fend off both nVIDIA and Intel is no easy task.
And believe it or not, I actually think AMD make some great products - great value too. But the truth is they have been playing catch up for years. The anti-trust case did not stop them from innovating, and that's what they need to do. Luckily with the new Phenom II's things are definitely looking up but the Core 2 Duo series have been dominating for many years now.
I'm not an Intel fanboy (AMD BE-2350 in my HTPC), but no need to blindly root for the underdog when they really haven't got the guns to go to battle with.
@ Daza: well said.
@ Daza
For a period of time prior to the ATI purchase, AMD made the fastest and most energy efficient x86 chips money could buy. Athlon 64s were faster and cooler than Pentium 4s, not to mention the 64 bit extentions. Despite this fact, it was very hard to find an Athlon 64 system at retail... I wonder why that was?
There should be legal action against Intel in this country too. If they can find a few people who are most culpable they should probably face jail time.
For what it's worth, my current desktop is an Intel Q6600, my lappy is an AMD Turion 64 x2
@MeanSpyvie
I'm don't know where you were shopping, but during the time of AMD Athlon-64 performance domination, I could find those chips everywhere. The retail outlets had AMD chips in the majority of their high and middle end computers being sold, with some Intel thrown in for the lower-end and for the unknowing consumer who just wanted the Intel name.
Oh really Tuxedo.Bond1??? What about Dell, HP, Gateway, etc??? They all sell the majority
of their computers via web and they dint offer AMD as an alternative. And i too never saw
a computer (with major brand) in a retail store that had an AMD chip.
So how much does AMD get out of this?
AMD is not getting anything. EU gets all the money. It was a case of EU vs Intel, not AMD vs Intel.
AMD can now sue Intel after this and try to get some money for the damages they've suffered.
They get a rebate on a new Intel/Windows 7 computer.
free mac.
WOW - it seems there is corruption everywhere you look!? We are enjoying the latest UK government scandal: Politicians claiming extortionate amounts of money for "Garden work" or "interior designers" and making money from the downturn in the housing market ... and we trust these people with our TAX money!?
Craziness.
Please provide an example of corruption from the article in question.
@ fanman "Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years."
Do you work for Intel?
@fanman All corporations are corrupt. "A corrupt business enterprise", I think that's pretty much the definition of a corporation.
Oh right sorry rezaudio I thought that you were calling the EU corrupt. Too early for this. :P
@fanman: How stupid can you get? Intel paid device manufacturers to keep clear of AMD chips.
Easy now chaps - it was a mistake ... although I bet the EU are not totally corrupt free!?
My friend just made a good point: "I bet the CEO of Intel (or whoever was in charge at the time of doing the dodgy deals) doesn't get into any trouble"
I think that although the fine is huge you could probably liken it to some kind of Marketing expense and I'm sure they will just make a few thousand people redundant to compensate!
bong bing bong - Idiots Inside ;o)
That's a huge fine, but considering what the EU has accused them of doing, the fine is probably quite reasonable. No sympathies here, and good luck to AMD's future.
The thing is, these bails are considered how much loss Intels practices have ment for the EU as a direct result of taking AMD out of competition. AMD in the end will see nothing of this money since this will go just like MS´s bail towards the EU treasure.
I do wonder though how much benefit had Intel from their actions. In 2008 they had about 5.2 billion USD profit so this might be quite a cut it isn´t likely to put Intel in debt. On the other hand AMD has been pummeled totally down and for what it seems not much of a competitor anymore. This fine in the end might just be meaningless towards Intel.
This is just the financial bailout that can put AMD back on top. Now if only GM could get the EU to give them a similar ruling against some competitor things might turn out differently.
idiot
AWESOME !!!!!!!!!!!!!!!!!!
Finally something going AMD's way, if not the processors.
I've always wondered: Who gets the money from the fine? And what can/do they do with it?
I do.
I am awaiting the large novelty cheque to arrive shortly.
Too bad, with that much of money cannot enjoy getting laid.
Presumably it goes into the tax pot, and is then spent on things like healthcare and public services. If AMD want a slice of the action they should sue for damages.
@fanman
No, the money doesn't go to healthcare or public services in the traditional sense. The EU is not a (federal) government and does not provide these directly. The money goes into the EU budget and reduces member state contributions. In a sense, the benefits end up trickling down to taxpayers, just not in that way.
@fanman
healthcare and public services? The EU doesn't do those, it's not a government.
large checks? :D
or perhaps like this?
http://www.blogpirate.org/2009/05/10/pirate-bay-founder-crafts-distributed-denial-of-dollars-attack/
It goes to renew trash cans in Turkey (only ones in tourist destinations for some reason - and yes I'm serious I live there)
Richard, thank you for backing me up. I don't understand how all these MS-loving people low rank us for voicing our honest opinions. Sure, take our opinions with a grain of salt, but don't turn a blind eye!
uhm.. who are you talking too?