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By | John Oates 21st September 2009 12:50

Intel used rebates to freeze out AMD, EC docs show

Email evidence behind billion euro fine

The European Competition Commission has released more of the evidence that lay behind its decision to fine Intel over a billion euros for abusing its market position and undermining competion in the chip market.

The Commission quoted emails from Dell executives which made clear that its rebates from Intel were conditional on it not selling any AMD-based machines. One email said if Dell "joined the AMD exodus" it would see its rebate cut to zero while Intel investigated and then: "We'll also have to bite and scratch to even hold 50%, including a commitment to NOT ship in Corporate. If we go in Opti [Dell product series for corporate customers] , they cut it to <20% and use the added MCP to compete against us. ".

Rebates to HP in the period November 2002 to May 2005 were dependent on HP buying not less than 95 per cent of its chips from Intel. The company also faced restrictions on how it sold those few AMD chips it could buy.

HP could only sell AMD-based machines directly to small and medium businesses - they could not go to distributors or resellers.

A mail from HP, dated September 2004, said: "You can NOT use the commercial AMD line in the channel in any country, it must be done direct. If you do and we get caught (and we will) the Intel moneys (each month) is gone (they would terminate the deal). The risk is too high."

The Commission also found evidence of concealment - agreements with Dell, HP and retailer MSH were all unwritten.

There was also evidence that Intel itself recognised that AMD was a growing threat. An internal Intel email from September 2004 said: "Opteron is real threat today… Opteron-based single WS [Workstation] benchmarks beat [Intel's] Xeon in all cases."

Intel continues to dispute both the factual and legal basis of the Commission decision and is appealing it.

Intel said:

--Intel is committed to ethical business behavior and compliance with all applicable laws and regulations governing business practices. We are convinced that we’ve adhered to those standards and acted legally at all times in this matter.

--The Commission relied heavily on speculation found in emails from lower level employees that did not participate in the negotiation of the relevant agreements if they favored the Commission's case. At the same time, they ignored or minimized hard evidence of what actually happened, including highly authoritative documents, written declarations and testimony given under oath by senior individuals who negotiated the transactions at issue.

--Also, the Commission consistently construed ambiguous documents in a manner adverse to Intel, while overlooking or dismissing authoritative documents as “insufficiently clear” when they contradicted the Commission’s case. This pattern occurred across the board with respect to documents and statements submitted not only by Intel but also by third parties. The result was that the Commission dismissed or ignored extensive exculpatory evidence. </blockquote

The Commission summary is here. ®

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