AMD Renews Antitrust Rhetoric, Reopening Intel + HP Complaint

As the San Jose Mercury News reported this morning, AMD Executive Vice President for Legal Affairs Tom McCoy, speaking yesterday before a gathering of technology executives at the University of California at Berkeley, told the moderator -- a lawyer with the US Federal Trade Commission -- that he believes the US Government has been lax in its antitrust enforcement in recent months. As an example, McCoy re-ignited an old quarrel with Intel, addressed in of its federal antitrust complaint that has not been dismissed by Judge Joseph Farnan, and which some observers say may still have legs.

McCoy reminded the gathering of two substantive parts of its complaint, one of which resulted in the type of enforcement response in Japan that McCoy says is lacking from US officials.

According to AMD, in 2003, HP was negotiating with AMD for a deal that would result in AMD processors being included in its new line of Evo computers. But HP asked to be paid for that privilege, as AMD alleged in its original complaint against Intel, requesting that $25 million be paid per quarter to help offset what was anticipated to be retaliatory response from Intel.

As the complaint describes and as McCoy cited, "Eager to break into the commercial market, and to earn a place in HP's successful 'Evo' product line, AMD agreed instead to provide HP with the first million microprocessors for free in an effort to overcome Intel's financial hold over HP.

On the eve of the launch, HP disclosed its plan to Intel, which told HP it considered AMD's entry into HP's commercial line a 'Richter 10' event. It immediately pressured HP into (1) withdrawing the AMD offering from its premier 'Evo' brand and (2) withholding the AMD-powered computer from HP's network of independent value-added resellers, the HP's principal point of access to small business users for whom the computer was designed in the first place."

HP ended up only utilizing 160,000 of the free million processors AMD offered, the complaint says. As a result, McCoy said yesterday, customers paid more for Evo computers than they might have otherwise. "Customers paid more and were forcibly deprived of AMD alternatives," the Mercury News quotes McCoy as saying.

Today, BetaNews asked an AMD spokesperson for new clarification on this issue. We asked whether there might have been a more practical or logistical reason for HP's partial rejection of AMD's offer. We also asked whether it might have been reasonable, in hindsight, for HP to have been suspicious of AMD's motivation for wanting to give away a million processors. The spokesperson declined comment on these issues, referring us instead to the original complaint.

The second renewed element of the complaint to which McCoy referred was an allegation that Intel offered rebates to customers of as much as 10%, for purchasing Intel processors that met or exceeded target levels.

The Japanese Fair Trade Commission took Intel to task in March 2005 for rebates it was found to have offered to Japanese OEMs, rewarding them for processor purchases amounting to between 90% and 100% of their product lines.

McCoy argued yesterday that the US FTC's inactivity on these and other antitrust issues constitute a "retreat" from enforcement of Section 2 of the Sherman Antitrust Act.

For its part, Intel continues to categorically deny any wrongdoing, including with regard to these two allegations, though in March 2005 the company said it would comply with the Japanese FTC's recommendations.