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[INQ] Korea Fair Trade Commission rules against Intel

573 Views 8 Replies 8 Participants Last post by  Chucko

Guilty of bullying AMD

THE AMERICAN ANTITRUST Institute has taken a crash course in Korean, translating chunks of a 133 page ruling which says Intel abused its market dominance through the use of rebates, bullying customers into choosing its chips over rival AMD's.

Apparently the Korea Fair Trade Commission has found Chipzilla guilty as charged for "unfairly excluding competitive enterprisers" and harming customer interests using rebates in a carrot and stick approach to steer business away from Intel's only (and much smaller) competitor, AMD, in violation of the Monopoly Regulation and Fair Trade Act.

Intel apparently used the dirty trick of selling its wares at "unreasonably low prices" and buying goods or services at unreasonably high prices in order to have its way, something so uncharacteristic (*cough*, NOT) it has us reeling in shock and disbelief.

Samsung was one of the firms named in the suit as having been bullied into choosing Intel CPUs over AMD's back in 2002. Apparently, Intel "continuously requested" Samsung stop buying from its competitors, and when the word "please" didn't work, Intel decided to get abusive, significantly reducing its volume of rebates to the electronics giant in the first and second quarter of 2002. Chipzilla then asked again. With a little ‘aggressive' tone on the "please" no doubt.

Come May 2002, Intel purportedly realised it needed to take things to another level, implementing a "long term support plan" offering sweeteners like maximum-level rebates on the condition, of course, Samsung spent its cash buying blue.

The AAI document reckons Intel put an $800 million rebate proposal on the table in exchange for Samsung dumping AMD CPUs. No prizes for guessing whether or not Samsung took the bait. After all, it would be bad business not to, right? To hell with the moral high-ground.

The document also claims Intel set up something dubbed the "Samsung Risk Mgmt Plan" in January 2002, a master plan of sorts to isolate AMD and leave little Chip Kong out in the cold.

The same shady tactics were used with ***** Computers in Q3 2003 and sure enough, ***** folded like a napkin and started swapping AMD CPUs out for Intel's in Q104.

As if that wasn't enough, Intel decided to push ***** even further, asking the firm not to take part in an AMD product launch of 64-bit CPUs in September 2003 and requesting ***** keep Intel CPUs at the 70 per cent mark within domestic-consumption PC CPUs from fourth quarter 2004 to second quarter 2005. ***** agreed and got its reward in rebate blood money.

According to the Korean commission Intel's rebate system was "not a volume discount program but a system where the amount of rebates is reduced or increased according to fulfillment of conditions involving exclusion of competitors, through the determination of ECAP applied items, amount of discounts, and payment of MDF, regardless of partner's purchasing volume".

The committee also reprimanded Chipzilla for "Non-transparency" and for "rendering negative effects on consumer welfare" by pushing the market price way above the competitive market price which could have been reached with a common and simple volume discount policy.

When we confronted Intel's Chuck Mulloy with the ruling, he sighed and said Chipzilla believed there were "significant legal, factual and economic issues with the findings" and that Intel was filing suit in Korea to overturn it. Mulloy said the case would be done "de novo", meaning the entire case will be reviewed and all testimony will have to be sworn testimony - something Intel is quick to point out was not the case with the KFTC.

"You should not assume that ANY of the facts asserted by the KFTC are true" said Mulloy when we put it to him this was just Intel playing the big corporate bully of the playground, again.

"The KFTC opinion does not reflect the reality of the market or what happened. We'll prove that in court" said Mulloy, adding that it was hardly surprising the AAI was siding with AMD as the firm was a paid member and in no way objective.

Of course it remains to be seen how Korea's decision will affect the various other antitrust trials raging against Intel at the moment, but according to one AMD spinner we talked to "the document speaks for itself".

"Take your pick. KFTC, JFTC, EU. Based on the evidence obtained from Intel and its customers, they have yet to convince any antitrust authority that they have not broken the law" he added.

Either way, it certainly seems that when it comes to playing with chips, Intel's favourite board game is a high stakes game of Monopoly. µ

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Wow I cant wait till the other rulings from around the world comes in. I hope Intel is forced to pay AMD restitution. This is possibly the worst thing I've heard of a company doing.
I hope intel is not hit with heavy fines if they can't overturn the ruling...
i think i have a similar complaint file here, or i think it's the one:

Originally Posted by 003
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I hope intel is not hit with heavy fines if they can't overturn the ruling...

Its not like they can't afford it or deserve it

If they did all of whats claimed they should be fined signifigantly, they cost amd billions in revenue and cash that could have gone into more r&d, if they played fair the market share and amd's position would have been vastly different imo

Intel has the upper hand now in performance and vastly more money in its coffers, it could easily pay up and keep going so it shouldn't complain too loudly but it will

And for the record i'm not a fanboy out for intel blood, i am against any business that acts like this, the cpu market could have been vastly different today if this didn't happen and i think that is just a shame for all enthusiasts in the end
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Originally Posted by 003 View Post
I hope intel is not hit with heavy fines if they can't overturn the ruling...
Why? Unless you own Intel stock, I don't see why they shouldn't be hit with massive amounts of fines because its not like they can't pay it. Intel cheated in the market and they got caught. Its their mess and they need to pay the consequences for it.

However, I do hope to see AMD getting at least some money out of this. And I sure as hell hope they don't misspend it like they did in the k8 days.
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If the commission fines Intel, AMD probably wouldn't get anything out of it, at least that's the way it works in the US I believe. It doesn't really make sense why the commission should take the fines and then not give any of it to AMD. Afterall, it was AMD that was hurt by Intel's practices, not the commission.


Originally Posted by Weedvender
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However, I do hope to see AMD getting at least some money out of this. And I sure as hell hope they don't misspend it like they did in the k8 days.

Don't worry, Ruiz is no longer in charge!
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I agree; if this is true (and multiple anti-trust organizations finding it to be true does make me lean in that direction) then Intel should be made to pay for its bad business practices.
I first heard of Intel using strong-arm marketing tactics in the early '80s. So this doesn't surprise me in the least. I hope it's not true, but if it is, I hope they get what they deserve.
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