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A Thought on the Charges Against Intel by the EU Commision

post #1 of 52
Thread Starter 
Intel in Euro-Land:

Quote:
Computer chips are getting faster and smaller, and prices are dropping amid fierce competition. So naturally the European Commission thinks this is the ideal time to lodge another antitrust suit against another American technology titan.
Last Friday, EU regulators accused Intel Corp. of offering computer makers -- brace yourself -- rebates designed to harm rival Advanced Micro Devices, or AMD, in the chip market. In Brussels jargon, that's an "abuse of a dominant position" and could lead to a fine of as much as 10% of Intel's annual global turnover, or perhaps €3.5 billion.
As with its continuing case against Microsoft, the Commission isn't responding to gripes from customers or consumers. The investigations were prompted by AMD, which has launched legal proceedings around the world against its archrival. This regulatory forum shopping includes a pending lawsuit in a federal court in Delaware filed two years ago.
In Europe, a firm's size and success are the determining factors of its alleged violations. The same commercial practices would be entirely legal if the company in question were not considered "dominant." This leaves companies in the absurd position of being free to compete as hard as possible until they reach a certain market share -- at which point their hitherto legal behavior becomes unlawful. This is the kind of reasoning that has damaged the Commission's credibility, as Europe's highest courts overturn one major antitrust decision after another.
In Intel's case, Brussels claims to be acting for consumers. "The rebates offered by Intel were of such a quantity, of such an amount, that an efficient competitor would be forced to price below cost and we think that would be very bad for competition and bad for consumers who would be buying computers," says a Commission spokesman. If Intel fails to persuade the Commission to drop its charges, it will be forced to stop its "anti-competitive" behavior; that is, it will have to discontinue the rebates and raise prices.
Presumably, the harm to consumers is that the rival's potentially superior products are muscled out of the market. In a worst case the rebates may even force the competitor to give up altogether, allowing the remaining player to establish a monopoly. But such a scenario runs counter to the history and very essence of the IT business, which remains competitive, dynamic -- and unpredictable. With 80% of current market share, Intel's dominance is indisputable.
But with about 20% of the $33 billion market for microprocessors, AMD is hardly a push-over. The company's ups and downs -- it gained share in 2005 and most of 2006 before suffering a downturn late last year -- seem to contradict its allegations of Intel's anti-competitive behavior. A reasonable conclusion is that AMD's fortunes correspond more closely to its own innovation rate than to any rebate scheme by a rival. Similarly, Intel's recent comeback was due to its competitive products, chips that increase performance but lower energy consumption.
The case against Intel is the latest in a series of EU assaults on successful U.S. technology companies. Brussels apparently is determined that if Europe can't be a global leader in information technology it can at least become that industry's world-wide regulator. If it succeeds, the world is bound to be a less competitive and innovative place -- like, well, Europe.
Wall Street Journal

Low prices are bad for the consumer... The government must step in for failing businesses... We must raise prices...

Give me a break. The EU is a joke.
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post #2 of 52
I almost never say this in a non-joking manner, but...

Owned.
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post #3 of 52
When it comes down to it, I'd put more credit towards The Wall Street Journal (a newspaper that's won the Pulitzer Prize 33 times), over the Ars Technica or The Register (a tabloid that was created by a former employee of The Inquirer) any day. IMHO, of course.

Thanks Pauldovi for the insightful read.
    
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post #4 of 52
Quote:
Originally Posted by pauldovi View Post
Give me a break. The EU is a joke.
LOL. Don't disguise the anti-EU sentiment pauldovi .

Whenever a US company is subject to any actions by any regulatory body in the EU, certain people always seem to pipe up with their criticisms... What would you say if the situation were reversed and it was an EU company that were subject to US regulatory body actions? I know I wouldn't be complaining. If an EU company wants to operate in the US, it has to be subject to US regulation, which is perfectly usual. Why the problem when the situation is the other way around?

If the people in charge of these US companies didn't think the EU market was worth the hassle, they wouldn't be there... The fact is that the EU is a bigger market than the US and US companies want a slice of the EU pie. If they want it, they have to dance to the EU tune, it's as simple as that.

Highly-Annoyed
    
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post #5 of 52
The EU were idiotic to charge Intel for producing good products and lowering prices, which is also called competition.
If AMD were starting to sink then the EU would have a right to slow down Intel but AMD is still doing very well.
post #6 of 52
This is balls, the EU are bollocks!

Im so glad we havent tottaly bummed into the EU, Britian needs to stand strong and take back everything we ever had to do with the EU
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post #7 of 52
People don't quite seem to understand that Intel's current price slashing has little do with competition. The demand for computer chips has dropped and dropped and dropped. The only 'competition' really only involves the timing of the price drops (meaning simultaneously). But someone looking at the EU through the typical right-wing anti-everything that might remotely slightly effect or niggle my possible far off thoughts to make money I thought up while on the can glass of course you'd see it as competition. The big issue are the alleged 'corporate bribes' Intel offers.

Do you guy's remember when AMD's product ruined Intel's for three years? I do, and if the market was not rigged by Intel's leveraging of it's name/power do you think the market would really have gained a measly 25% marketshare? (production capacity not withstanding) I think not. And before you say anything, the prices were high then because demand for chips was high anyways.

Not to mention now, Intel's price dropping really is only going to be looked at by them as an investment in the future. Take a hit now, push your competitor to bankruptcy and hike prices again when you stand alone and stand to make sooo much more than you took a hit on.
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post #8 of 52
Thread Starter 
Quote:
Originally Posted by Highly-Annoyed View Post
LOL. Don't disguise the anti-EU sentiment pauldovi .

Whenever a US company is subject to any actions by any regulatory body in the EU, certain people always seem to pipe up with their criticisms... What would you say if the situation were reversed and it was an EU company that were subject to US regulatory body actions? I know I wouldn't be complaining. If an EU company wants to operate in the US, it has to be subject to US regulation, which is perfectly usual. Why the problem when the situation is the other way around?

If the people in charge of these US companies didn't think the EU market was worth the hassle, they wouldn't be there... The fact is that the EU is a bigger market than the US and US companies want a slice of the EU pie. If they want it, they have to dance to the EU tune, it's as simple as that.

Highly-Annoyed
People provide me with one instance of a EU company being hassled by a US regulatory body. It doesn't happen, because the US doesn't run around trying to regulate companies like the EU does. The EU has attempted to limit Microsoft and Intel in the European market. I am not aware of the non-tech related companies they have targeted, but I am sure they are there.

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it." -Ronald Reagan

The problem is not with the EU laws, but with the abuse of the EU laws and the double standards against Intel.

EU is a similiar size in GDP as the US, but the US is still slightly larger.

Quote:
Originally Posted by Ihatethedukes View Post
People don't quite seem to understand that Intel's current price slashing has little do with competition. The demand for computer chips has dropped and dropped and dropped. The only 'competition' really only involves the timing of the price drops (meaning simultaneously). But someone looking at the EU through the typical right-wing anti-everything that might remotely slightly effect or niggle my possible far off thoughts to make money I thought up while on the can glass of course you'd see it as competition. The big issue are the alleged 'corporate bribes' Intel offers.

Do you guy's remember when AMD's product ruined Intel's for three years? I do, and if the market was not rigged by Intel's leveraging of it's name/power do you think the market would really have gained a measly 25% marketshare? (production capacity not withstanding) I think not. And before you say anything, the prices were high then because demand for chips was high anyways.

Not to mention now, Intel's price dropping really is only going to be looked at by them as an investment in the future. Take a hit now, push your competitor to bankruptcy and hike prices again when you stand alone and stand to make sooo much more than you took a hit on.
The demand for computer chips is not low. It has risen steadily for years. Intel's price cuts and rebates are absolutely competitive. How else could it be seen in any other way. Intel isn't being charged for lowering its prices, it is being charges for lower its prices to a point where AMD would be below cost in order to compete. Well too bad AMD, you should become more efficient. If you cannot stand up to the efficiency of your rival, then too bad. You don't need the government to attack Intel to keep AMD afloat.
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post #9 of 52
i thought one of the main reasons for the charges was intel using its market power to make oem computer builders use their chips instead of amd's.
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post #10 of 52
Quote:
Originally Posted by b.walker36 View Post
i thought one of the main reasons for the charges was intel using its market power to make oem computer builders use their chips instead of amd's.
Yup. But Paul is a huge right-wing guy, he'll never admit or see anything that contradicts his view that unfettered capitalism can never do wrong. (coughcough October 1929 coughcough).

Alright Paul, prove it. Until just recently (like a month ago) sales of processors were way below expected, meaning... they're gonna drop prices. Flagging sales at a fixed price point means that demand is flagging. And since we've heard of an upturn in the market you've noticed there are no more planned price cuts? Convenient right?
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