Tue, Sep 22, 2009 page11

• EU releases evidence of Intel pressure on buyers

  ‘HARD FACTS‘ An EU spokesman said that Intel took away from millions of Europeans the ability to choose the chip they would have wanted in their computers

  • AP
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  The EU yesterday published e-mail excerpts from computer makers and Intel Corp to show that Intel pressured chip buyers into choosing Intel over rival Advanced Micro Devices Inc (AMD).

  Intel was hit by a record EU antitrust fine of 1.06 billion euros (US$1.45 billion) last May for what the EU said was using strong-arm sales tactics such as threatening to withdraw price rebates to squeeze out AMD. The company rejects the charges and is appealing to the EU courts.

  EU spokesman Jonathan Todd said the publication of the EU’s decision “gives full details of the hard facts on which the Commission’s decision was based.”

  “You can see for yourselves the way in which Intel broke the law and deprived millions of European consumers of choice of the type of computer chip they wanted to have in their computers,” he told reporters.

  Intel made no immediate reaction. The Santa Clara, California-based company has previously defended its sales practices — which include rebates to big Intel customers — as legitimate and good for customers because it can lead to lower prices.

  The company claimed in court documents published early this month that EU regulators made serious mistakes with their case. They said regulators should check if the rebates actually shut AMD out of the market or affected sales to European customers — or if what Intel described as AMD’s “own shortcomings” were the cause of poor sales.

  EU regulators said Dell Inc executives were warning each other by e-mail in 2003 that buying more AMD chips could trigger retaliation from Intel that would be “severe and prolonged with impact to all lines of business.”

  Joining the “AMD exodus” would see Dell’s rebate from Intel stripped to zero “for at least one quarter while Intel investigates the details,” the Dell executive said in an e-mail.

  Dell also complained to Intel in a 2004 e-mail that sticking to Intel chips “results in Dell being uncompetitive ... we have slower, hotter products that cost more across the board in the enterprise with no hope of closing the performance gap for 1-2 years.”

  Hewlett-Packard Co’s (HP) rebates from 2002 to 2005 were linked to its purchase of at least 95 percent of its business desktop chips from Intel, the EU said.

  HP was keen to keep this secret. An executive wrote a 2003 e-mail asking staff: “Please do not ...communicate to the regions, your team members or AMD that we are constrained to 5 percent AMD by pursuing the Intel agreement.”

  Another HP e-mail from 2004 said it could only sell AMD-based business desktops to small and medium companies directly — not via distributors — and that any move to do differently carried a high risk.

  “You can NOT use the commercial AMD line in any country ... 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 e-mail said.

  An NEC Corp e-mail said the company had agreed to buy 80 percent of its desktop and notebook chips from Intel in return for a support and an “aggressive” price. The EU also quoted an e-mail from Intel saying that Acer Inc had decided to drop an AMD notebook line in 2003 after calls with Intel executives.
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