Intel Antitrust Allegations Detailed

The European Commission released specifics on deals Intel allegedly made with Acer, Dell, Hewlett-Packard, Lenovo, and NEC that resulted in a record $1.45 billion fine.
The EC also accuses Intel of paying computer makers to restrict shipments of AMD-based PCs. Under such deals, called "naked restrictions," HP agreed to sell AMD-based business desktops between November 2002 and May 2005 only to small and medium-sized businesses exclusively through direct distribution channels, rather than channel partners. HP also delayed the launch of its first AMD-based business desktop in Europe for six months.

Other examples included Acer postponing the launch of an AMD-based notebook from September 2003 to January 2004, and Lenovo postponing the launch of AMD-based notebooks from June 2006 to the end of 2006.

The EC also found that Intel sought to conceal its arrangements with PC makers and MSH. The rebate deal with Dell, for example, was the result of "constant oral negotiations and agreement," Dell allegedly told the EC.

While HP had a written agreement with Intel, the conditions of the rebates were unwritten, the EC said. In the case of MSH, the written deal said the agreement was non-exclusive, but the evidence pointed to the opposite. "It was clear to MSH that despite the non-exclusivity clause the exclusive nature of the relationship remained, for Intel, an essential element of the relationship between Intel and MSH," the retailer told the EC.

Intel's Mulloy said the EC's evidence "relied heavily on speculation found in e-mails from lower-level employees that did not participate in the negotiation of the relevant agreements."

"At the same time, they (the EC) 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," Mulloy said. "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."

Indeed, the EU's ombudsman in August criticized European regulators for failing to record evidence that favored Intel and said the EC committed "maladministration" by not recording in the case file "potentially exculpatory" comments from a senior executive with Dell, the Wall Street Journal reported.

The EC claimed that when Intel made the illegal deals with customers, AMD was a growing threat. For example, in an October 2004 e-mail from Dell to Intel, an executive with the computer maker said, "Intel is increasingly uncompetitive to AMD which results in Dell being uncompetitive to [Dell competitors]. 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."

At the time, AMD was making headway in the market with its Opteron server processor, which competed against Intel's Xeon CPU. Since then, Intel has regained market share against its smaller rival.

In an e-mailed statement, Tom McCoy, AMD executive VP of legal affairs, said Monday, "This is the first time that Intel has had to confront now publicly available facts of its illegal behavior and it won't be the last."

Other potential headaches for Intel include continuing investigations by the Federal Trade Commission and the New York attorney general's office, and an antitrust lawsuit filed by AMD against Intel. That case is expected to go to trial in March, according to AMD.

Intel has appealed the EC's fine and decision, a process that's likely to take years. In the meantime, EU regulators have said that Intel must stop all unlawful practices immediately, and they have promised to "actively monitor Intel's compliance with this decision."

InformationWeek has published an in-depth report on e-discovery. Download the report here (registration required).

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