Intel: we’re not abusing our market position in Europe
Intel is on the defensive after a preliminary finding by the European Commission found that the company is engaging in anti competitive behavior. Intel’s senior counsel has responded to the finding by saying that the company’s actions in Europe actually benefit consumers.
The European Commission has sent a Statement of Objections to Intel where it outlined its preliminary conclusion that the company has engaged in three types of abuse of its market position:
- 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.
- In a number of instance, 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.
- 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.
The commission believes that the three types of conduct reinforce each other and are part of a single overall anti-competitive strategy to exclude AMD from the micro processor market. It also believes that Intel has infringed the EC Treaty rules on anti-competitive behavior.
Intel’s senior vice president and general counsel Bruce Sewell (pictured) quickly responded to the accusations:
“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, ” he said.
“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 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.”
Intel has 10 weeks to reply to the Statement of Objections, and will then have the right to be heard in an oral hearing. If the preliminary views expressed in the Statement of Objections are confirmed, the Commission may require Intel to cease the abuse and may impose a fine.
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July 28th, 2007
Maybe I’m a bit thick, but I fail to see how the third alleged form of anti-competitve behaviour, as stated above, is against any sort of rules.
Surely most manufacturers like to be able to offer a price for their merchandise that is lower than their competitors – that’s how the market-place has operated since the dawn of time.
What’s wrong with Intel offering CPU chips at below cost in order to obtain greater market share? It’s not very different to Walmart advertising “loss-leader” specials in order to get more customers into their stores. Doesn’t Intel have the right to sell its merchandise at what ever price it sees fit?
If the bottom line to the consumer is lower priced computers, then I can’t see where the problem is.