AMD Japan sues Intel for $50m damages - and then some

By Drew Cullen → More by this author

30 Jun 2005 12:19

'Tip of the iceberg'

AMD Japan is suing its Intel counterpart in Tokyo for $50m in damages "arising from violations of Japan's Antimonopoly act".

In a second suit it is seeking "millions of dollars" in damages from Intel for various anticompetitive acts which "also had the effect of interfering with AMD Japan's right to engage in normal business and marketing activities".

The first case looks like a banker for AMD: the serious argument will surely be over the amount Intel will have to pay, not whether it should cough up at all.

In March, the Japanese Fair Trade Commission ruled that Intel deliberately tried to limit AMD's market share, by offering extra Intel Inside marketing funds to five PC makers, NEC, Fujitsu, Toshiba, Sony, and Hitachi, so long as they stopped buying AMD processors. The PC makers collectively account for 77 per cent of PC sales in Japan, the world's third biggest PC market.

Intel accepted the findings, while claiming that the JFTC's ruling "does not appear to take into account antitrust principles commonly accepted worldwide". In its response it said its action was legal and acceptable when measured against international standards of business behaviour.

This will mean little to a Japanese court, which will judge the case according to Japanese laws and Japanese norms.

Here is what AMD has to say for itself:

As a result of these illegal acts, AMD Japan suffered serious damages, losing all of its sales to Toshiba, Sony, and Hitachi, while sales to NEC and Fujitsu also fell precipitously ...

In the complaint, AMD Japan points to the following specific examples of anticompetitive actions taken by Intel:

Instructing a Japanese PC manufacturer to remove from its product catalog and Internet website all computer models using processors made by AMD, in exchange for providing a large amount of funds to that manufacturer;

Putting pressure on an AMD customer that was scheduled to attend a new product launch of AMD products. The customer eventually had to cancel its attendance at the new product launch;

Interfering with a joint promotional event being held by AMD and a customer to promote PCs using a new processor developed by AMD. Just before the promotional event was scheduled to take place, Intel purchased all the PCs that had AMD processors and replaced them with PCs using Intel processors. Intel K.K. provided a large amount of funds to this customer as an incentive to cooperate in this last-minute interference.

It says these acts "represent only the tip of the iceberg of Intel’s worldwide coercion of customers to prevent them from doing business with AMD Japan". Which is presumably where the the second suit comes in.

On a side note, AMD is making all the early running in the PR war - literally. Intel's communications chiefs operate on California time, which is why it took so many hours to cobble together a response from CEO Paul Ottelini to yesterday's antitrust broadside from yesterday.

Here it is:

Intel has always respected the laws of the countries in which we operate. We compete aggressively and fairly to deliver the best value to consumers. This will not change.
Over the years, Intel has been involved in other antitrust suits and faced similar issues. Every one of those matters has been resolved to our satisfaction. We unequivocally disagree with AMD’s claims and firmly believe this latest suit will be resolved favorably, like the others.

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