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By | Rik Myslewski 15th September 2009 21:38

Intel to EU watchdogs: 'It's AMD's fault'

'Manifestly disproportionate' fine

Surprising no one, Intel contends that European Union market watchdogs erred when they fined the chip-baking giant €1.06bn for anti-competive practices.

According to a report today by the Associated Press, Intel has filed a plea with the European commission to either reverse its decision entirely or - at minimum - reduce what Chipzilla calls a "manifestly disproportionate" fine.

The fine was announced in May this year, based on the European Commission's finding that Intel squeezed AMD's sales by tying rebates to computer makers' shunning of AMD processors, and paying said makers to delay and limit release of machines with AMD inside.

Intel isn't buying that rationale. According to the new plea, AMD's lower market share was due to that company's "own shortcomings".

The new plea is in support of Intel's formal appeal, filed in July, and claims that the Commission mistakenly levied the fine without a thorough examination of whether Intel's actions had "immediate, substantial, direct and foreseeable effects" on AMD's EU sales.

This is the latest volley in Intel's attacks on the reasoning behind the fine. Immediately after the ruling was announced, Intel CEO Paul Otellini said: "Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace... There has been absolutely zero harm to consumers."

He was even more forceful in a conference call with reporters that day, saying: "It's hard to imagine how consumers were harmed in an industry which has lowered the cost of computing by a factor of 100 during the term of this case, and at the same time that happened, AMD claims it's more vibrant than ever. So I don't see consumer harm or competitor harm happening here."

AMD, as might be guessed, disagreed. The company's VP of platform marketing Pat Moorhead told reporters: "Our prices are about 30 to 50 per cent lower than Intel on a processor-by-processor basis. Who's to say if there were free markets that Intel's prices wouldn't be lower?"

Moorhead's argument veered into the ad hominem, calling Otellini's comments "expected behavior from a three-time convicted monopolist" - the three times being the EU's decision and previous anti-competitive rulings in Japan and Korea.

On that same quarrelsome day, Intel's then-General Counsel, Bruce Seward (who jumped to Apple this morning), foreshadowed today's plea, saying: "The Commission decision has chosen to rely on weak pieces of evidence and to ignore evidence which contradicted its view."

Although it's not yet known when the European Court of First Instance will hear Intel’s appeal, it's a near certainty that more barbs will be tossed in both directions.

For starters, €1.06bn is a significant chunk of change - it, for example, transformed Intel's second-quarter performance this year from profit to loss. And should the Commission's decision stand, it may "open the floodgates" to a follow-on series of civil suits.

Which would unarguably have further "immediate, substantial, direct and foreseeable effects" on Intel's bottom line. ®

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