Ever wondered what was behind that $1.45 billion dollar fined that the European Union levied against Intel?
Well the EU’s antitrust division has released a public version of its May ruling against Intel and boy it isn’t pretty. Part of the ruling found that Intel had had issued “conditional rebates” to Dell from December 2002 to December 2005 – the condition being that it would only give rebates to Dell if they bought only Intel microprocessors.
In an internal Dell presentation in February, 2003, a Dell official noted that if Dell switched any of its microprocessor supplies from Intel to AMD, Intel’s retaliation could be “severe and prolonged with impact to all lines of business.” In a February, 2004, email, a Dell executive wrote that Intel executives were prepared for all-out war if Dell joined the exodus to buy AMD chips. Dell would have gotten zero market development funds for at least a full quarter. Intel would also use the market development funds not used by Dell to fund competitors to Dell.
Source: VentureBeat – EU releases dirty details of evidence against Intel in antitrust case
Apparently the same deal was applied to HP during November 2002 to May 2005 where any rebates were conditional on HP buying 95 percent of its processors for business desktops from Intel. Like the other two NEC was as well told that they would need to buy no less than 80 percent of its microprocessors for desktops and notebooks from Intel in order to qualify for rebates.
This kind of business practice was also extended to what was termed as “naked restrictions”. This tied Intel payments to HP, Acer and other companies on these companies limiting the types of AMD based systems sold to specific channels or by delaying the launch of AMD based systems. In an internal HP email in September 2004 an executive stated: “You can NOT use the commercial AMD line in the channel in any country, it must be done direct. If you do and we get caught (and we will) the Intel moneys is gone. The risk is too high.”
Of course Intel is contesting the decision citing – “There is nothing new here. This Decision reflects the underlying bias we have come to expect from the case team that ran this investigation.”
