Washington – The Intel decision in Europe has many in Washington wondering
whether US action may soon follow, especially in light of the major policy
speech Monday by Assistant Attorney General Christine Varney, which set
aside a Bush administration directive that had made it tougher to police
antitrust violations.
Wednesday, the European Commission announced that it is taking disciplinary
action against Intel for violating European competition law. Because of
the scope of the violations and Intel's size, the fine of $1.45 billion is
the largest in the history of EU antitrust enforcement.
More importantly for competition and consumers, the Commission’s ruling
bans Intel from engaging in its anti-competitive rebate practices in the
future. If correctly implemented, this decision will pave the way to
preserve and increase competition and innovation in the crucial x86
microprocessor market.
While the Federal Trade Commission [FTC], not Justice would rule on the
Intel case, Varney’s speech signaled a new era of antitrust enforcement,
which is likely to be in greater sync with the EU.
The EU decision is not a great surprise since it follows similar decisions
by Japanese and Korean competition authorities in recent years. While
antitrust authorities in the United States have been slower to engage, the
Federal Trade Commission and the New York State Attorney General’s Office
have opened official investigations and are considering actions of their
own.
The following statement can be attributed to Ed Black, president and CEO of
the Computer & Communications Industry Association:
“The significance of this ruling should not be overlooked. The Japanese
and Korean decisions were important, but this European action is the
culmination of a very thorough and broader investigation and is a sweeping
condemnation of Intel’s practices. When coupled with the publicly known
evidence, the steady drumbeat of adverse rulings by government after
government, a convincing picture has emerged revealing that Intel’s actions
were unquestionably strategically premeditated to be anti-competitive and
willfully illegal.
“U.S. regulatory agencies have indicated this week they will once again be
watchdogs on antitrust enforcement under the new Administration. Since the
evidence has been compelling to all those who so far reviewed it, a
vigorous US investigation focused on the evidence in the case leaves us
believing Intel will have its day of reckoning in the US as well.
“While recent actions in the political sphere indicate an attempt to try to
interject political factors into the US enforcement process, the Obama
Administration's commitment to the rule of law and its ongoing rejection of
narrow special interest pleadings should mean a future US decision will be
based solely on the merits.
"CCIA has monitored competition and antitrust issues for more than 35 years
now. Competition spurs innovation and innovation is a major driver of
economic progress. We need innovation now more than ever. What we don’t
need are companies that are too big to fail, too big to innovate, and too
big to compete on a level playing field.
"Although there has been much antitrust discussion as of late about
companies at the edges of the high-tech market, it is important to also
focus on the foundational markets at the very heart of technology industry
and the overall economy. Intel, with its monopoly on x86 computer chips,
is a perfect example. These chips power approximately 95 percent of
computers and servers available on the market today. The downstream
effects of Intel’s misuse of its market power have a negative effect on
virtually all industries and consumers.
"Innovation is essential to economic vitality. As the economy begins to
improve and a new order begins to solidify, regulators need to be
especially vigilant and thoughtful. Cutting-edge, high-tech industries
will lead us out of the current recession and serve as the engine driving
future economic growth – if they’re not squashed by unfair, illegal
business practices. Because high-tech markets are so interdependent, the
consequences of anti-competitive practices in them are often more serious.
It is vitally important that regulators take steps to preserve competition
in this critical sector, especially as the economy recovers.”
Background/Timeline:
- In March 2005, Japan’s Fair Trade Commission concluded that Intel
had violated the country’s anti-monopoly laws by illegally forcing
exclusivity on five Japanese PC makers.
- In June 2005, AMD filed an antitrust complaint in U.S. Federal
District Court for the District of Delaware under Section 2 of the Sherman
Antitrust Act, Section 4 and 16 of the Clayton Act, and the California
Business and Professions Code.
- In July 2007, the EC charged Intel with abusing its dominant
market position and maintaining its market share through illegal
anti-competitive actions. The Commission stated in the accompanying press
briefing that “in the short, medium and long-term, we think that the
actions of Intel are bad news for competition and consumers.”
- In January 2008, the New York State Attorney General launched an
antitrust investigation of Intel. The AG served a “wide-ranging” subpoena
seeking information on whether Intel penalized customers from using
competitor’s products, improperly paid customers for exclusivity and
illegally cut off competitors from distribution channels.
- In June 2008 South Korean antitrust authorities fined Intel $25
million for abusing its dominant position in the microprocessor market and
ordered the company to cease its illegal rebates to PC makers.
- In June 2008, the U.S. Federal Trade Commission announced its
investigation of Intel on antitrust issues.
- In July 2008, the European Commission announced it would expand
its Intel antitrust investigation to include additional allegations that
Intel offered retailers incentives not to sell computers that contained
chips made by its competitor AMD. The new allegations involving retailers
are more serious as they would negate Intel’s previous argument that its
rebates to computer manufacturers helped consumers by keeping prices low.
- In May 2009 the European Commission fines Intel $1.45 billion and
orders it to cease its illegal business practices that were shutting down
competition. The commission said it calculated the fine based on European
chip sales during the five years and three months that Intel broke the law
while under investigation.
Contact:
Heather Greenfield
202-783-0070 ext 113
Ed Black
202-783-0070 ext 110
