Intel Antitrust Allegations Detailed - InformationWeek

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IT Leadership // IT Strategy

Intel Antitrust Allegations Detailed

The European Commission released specifics on deals Intel allegedly made with Acer, Dell, Hewlett-Packard, Lenovo, and NEC that resulted in a record $1.45 billion fine.

European regulators on Monday released details of illegal deals Intel allegedly made with Acer, Dell, Hewlett-Packard, Lenovo, and NEC in an attempt to limit the release of PCs based on competing products from Advanced Micro Devices.

The latest document from the European Commission, the governing body of the European Union, stemmed from an EC decision in May that found Intel guilty of anti-competitive practices that aimed to defeat AMD. The ruling resulted in a record $1.45 billion fine.

While the charges against Intel have largely been reported, the latest disclosure provides more specifics on the chipmaker's alleged abuse of its market dominance. The document also names the computer makers that allegedly entered deals with Intel.

In a statement, Intel spokesman Chuck Mulloy said there was nothing new in the latest document.

"This decision reflects the underlying bias we have come to expect from the case team that ran this investigation," Mulloy said. "We are convinced that the commission's conclusions regarding our business practices are wrong, both factually and legally."

In general, the commission accuses Intel of paying computer makers through rebates for either not shipping or delaying the launch of PCs based on competing products from its main rival, AMD. Unlike previous disclosures, however, the latest document provides the names of computer makers that acknowledged receiving the rebates.

For example, Dell received rebates from December 2002 to December 2005 for buying exclusively from Intel, according to the EC. In an internal presentation in February 2003, Dell executives noted that buying from AMD could bring retalation from Intel that would be "severe and prolonged with impact to all LOBs (lines of business)."

Intel also provided rebates to HP from November 2002 to May 2005 on the condition that HP buy no less than 95% of its CPUs for business desktops from Intel, the EC said. In an e-mail written in July 2002 during rebate negotiations, an HP executive wrote, "Please do not... communicate to the regions, your team members, or AMD that we are constrained to 5% AMD by pursuing the Intel agreement."

Manufacturer NEC received Intel rebates from October 2002 to November 2005 on the condition that it purchase no less than 80% of its processors for desktops and notebooks from Intel, the EC said. Rebates received by Lenovo in 2007 were predicated on buying notebook chips exclusively from Intel.

In a December 2006 e-mail obtained by the EC, a Lenovo executive said, "Late last week Lenovo cut a lucrative deal with Intel. As a result of this, we will not be introducing AMD-based products in 2007 for our notebook products."

According to the EC, Intel also provided rebates to Europe's largest PC retailer, Media Saturn Holding, on condition that MSH sell Intel-based PCs exclusively from October 2002 to December 2007.

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