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Intel’s legal troubles continue to multiply.
While the company’s product roadmap appears stable and robust these days, the issues of whether Intel is abusing its market position and its status as the world’s top microprocessor producer seem to be drawing an equal number of headlines.
On Feb. 12, the European Commission raided Intel’s offices in Munich, Germany, as well as several of the continent’s larger electronics and PC retailers, including Media Markt and two other suppliers. This latest action by the European Commission-the antitrust enforcement arm of the European Union-comes just a few weeks before Intel is expected to answer charges that it has abused its market position by offering deep discounts to PC makers that stifle competition.
The EC’s actions follow the Jan. 11 announcement from N.Y. Attorney General Andrew Cuomo that his office would investigate whether Intel used rebates and other tactics to force PC vendors to select its chips instead of those made by Advanced Micro Devices.
These events, coupled with other inquiries in Japan and South Korea, seem to suggest that some regulatory agencies have decided to place Intel under the microscope to determine if the company truly does abuse its market position. AMD has been making that argument for years and plans to detail its complaints in a federal lawsuit that is scheduled to go to trial in 2009.
“This is an important escalation and expansion of the [European] Commission’s investigation into Intel’s illegal business practices and the resulting harm to consumers,” said AMD spokesperson Michael Silverman, referring to the raids in Germany.
For some, the continued pressure from the EC, along with the interest of the N.Y. Attorney General’s Office, could force Intel to change some of its practices, such as its discounts to OEMs. This could in turn have an affect on the PC market. After Japan ruled against Intel, Toshiba–a stalwart buyer of Intel chips for years–began offering laptops that use AMD microprocessors.
Intel’s reaction to these actions by authorities in Asia, Europe and the United States remains unclear. The company rarely comments about its legal affairs other than to say it cooperates fully with all investigations.
Does Any of This Help AMD?
“As is our normal practice, we are cooperating with the investigators,” Intel spokesperson Chuck Mulloy wrote in a Feb. 13 e-mail to eWEEK. “As you probably know, investigations of this nature are confidential so we can’t go into details.”
Intel has noted in the past that these types of investigations “mirror” the complaints outlined in AMD’s lawsuits, with the implication being that AMD is more active in pushing these agencies than it admits.
Still, the actions in Europe and elsewhere appear to have forced Intel to change its thinking and practices. For example, Intel disputed the charges in Japan, but agreed to change some of its practices. John Spooner, an analyst with Technology Business Research, said the ongoing investigations have forced the chip giant to change some of its practices to avoid additional scrutiny in the future.
“You’d have to expect Intel to be a little more careful, especially when you see what these guys are objecting to,” Spooner said. “I think what all these different investigations will do is force Intel to look at its rebate policy and look at how it needs to restructure its sales deals in the long run.”
Even if Intel changes its practices, it’s not clear that will help AMD gain market share when it comes to x86 processors. Spooner said AMD gained market share when it produced chips that competed with Intel in terms of price and performance. When AMD has not delivered, such as the case with its quad-core processors for servers and desktops, it has lost share to Intel.
The question for Intel now is whether these actions will convince the U.S. Department of Justice or the Federal Trade Commission to investigate Intel’s market practices. The raids in Germany also raise questions of whether the EC is looking for additional evidence to bolster the case it will present in March.
The next hearings by the EC about Intel are scheduled for March 11.