AbsoluteVista

Intel’s global antitrust mess

AMD has been battling it out with Intel in the courts in the US.

About a year ago, we were able to get a teleconference with AMD Executive VP and general counsel, Tom McCoy, the details of which I posted here after a personal follow-on interview with Tom.

Well, a couple of weeks ago, the other shoe dropped, with the United States Federal Trade Commission, FTC, escalating their former informal inquiry into Intel's trade practices into a formal full-blown investigation.

After that, a cascade of (mostly) bad news has been dropping for Intel.

Actually, to be chronologically correct, the South Korea FTC fined Intel $24.5 million USD, and issued a cease-and-desist order on June 5; on June 6, the US FTC declared their investigation had gone formal; and almost simultaneously, the judge in the civil antitrust case delayed that lawsuit until 2010.

Seeking to get to the bottom of this as much as anyone outside the halls of power at either AMD or Intel can, I tried to get Tom McCoy to decipher some of the legalese in the news.

Unfortunately, Tom has been abroad for a while – hence this late posting – but Scott Carroll and Mike Silverman were very resolute in getting hold of him for me.

I was able to finally get in touch with Tom late Thursday in a conference call from an overseas location where he was.

John Obeto: Does the executive management at AMD feel vindicated at last about their position as regards the anticompetitive behavior exhibited by Intel in the marketplace?

Tom McCoy: It is not surprising that our position seems stronger. It shows that our position is credible and has integrity.

John: Why is Intel losing?

Tom: Information collected by other sovereign nations in surprise raids on Intel, and evidence obtained during discovery from OEMs has revealed the extent of their behavior.

John: Almost coincident with the FTC's decision to formally investigate Intel, came the order the judge in the civil suit to delay the trial for a year, if I remember correctly. I think this might be a positive development; then again I am not a lawyer. Do you think it is?

Tom: Delay, delay, delay has been the Intel strategy. Unfortunately, justice delayed is justice denied.

The trial was moved forward by ten (10) months, due to Intel's inexplicable epidemic of failure in producing documents to AMD and the Court that they are required to turn over during the discovery phase of the US civil case.

John: As I understand it, antitrust law in the EU, Asia, and indeed most of the world primarily focuses on harm done to a monopoly's competitors, while harm to consumers is the thrust of antitrust law over here. Is it safe to assume that the wiggle room for Intel has gotten much smaller with it having to defend its behavior on both grounds?

Tom: The spate of antitrust inquiries and decisions show that the concern over Intel's behavior is growing worldwide. Intel is now the focus of a global investigation into the nature of their anticompetitive behavior in several sovereign jurisdictions.

You cannot use a dominant position to coerce PC makers to boycott a rival's products.

What you are also seeing is a convergence of global opinion over Intel's behavior.

So far, Intel is zero for all in all concluded investigations, meaning they have yet to convince a single regulator to date that has reviewed the evidence that their business practices are legal, pro-consumer, and pro-competitive.

These sovereign nations want Intel to step up to the truth.

John: Is it just me, or isn't it highly suspicious that the US FTC only acted after the decision by the South Korea FTC?

Tom: Not at all. I feel their (the US FTC's) timing proximity is truly coincidental.

In the course of the informal inquiry, as well as possible network conversations between the global community of FTC staffers, the (US) FTC presumably came to the conclusion at there was enough merit to the allegations, and decided that there was a need to formalize their investigation.

John: With 'Barcelona' finally shipping in quantity, the Phenom X3 and X4 reestablishing AMD as the value/performance leader, and the new 'Puma' platform coming into place with mobile systems, I would like to ask a question I had asked you a year ago again, namely,

"Given your competitive products, can you take market share from Intel again if the playing field were leveled?"

Tom: Yes! We have competitive products in the desktop, mobile, and server segments

What we bring to those segments is choice. The marketplace wants choice, and not be handcuffed to a monopoly supplier.

Furthermore, we have a lot of technology that is extremely relevant to the value market.

John: Some of the more jaded might be thinking this so I have to ask, is this case about pricing or discounts?

Tom: No. In fact, before the investigations started, prices actually increased! Intel's pricing, discounts, and rebates are inconsistent with any consumer benefits at all.

While they might term them as such, they are neither discounts nor rebates, but funds used as a cudgel to coerce vendors to boycott our products, which is illegal.

It cannot be a discount or a rebate if non-compliance is met with punitive price increases and discriminatory retaliation.

John: Is this behavior ongoing to this day?

Tom: Yes!

Wow!

There you have it.

The illegal behavior continues even as I write this!

Obviously, constantly delaying the lawsuits allows Intel to continue to keep AMD's market share number is stasis on the one hand, while it attempts to subject AMD to that sincerest form of flattery, imitation.

One only hopes that the US FTC avails itself of the body of work Intel has created as complied by other trade commissions and makes a decision sooner rather than later.

To preserve choice, and to benefit consumers.

I would like to thank Tom McCoy for taking the time out of his schedule to talk to me, especially taking into effect the time difference from where he was to Pacific Daylight Time.

I would also like to thank AMD, Mike Silverman, and Scott Carroll for making this interview possible.

I have paraphrased Tom's replies consistent with notes I made during our conference call.