The agreement: Intel and AMD 'wipe the slate clean'

The complete text of this morning's agreement between AMD and Intel was filed with the US Securities and Exchange Commission, and was made public early this afternoon. The agreement explicitly brings to an end three different legal disputes: the 2005 AMD antitrust suit against Intel in Delaware; the 2005 AMD antitrust suit against Intel in Tokyo, Japan; and Intel's objections to AMD's restructuring plan, specifically to spin off GlobalFoundries from a subsidiary to an independent unit.

The agreement acknowledges the gist of AMD's complaints about Intel's prior conduct, but Intel does not in turn acknowledge having acted as AMD suggested. But from there, the agreement effectively acts as if to say, "You know what? Let's forget about all that and start over."

"To avoid the time and expense of litigation, and without any admission of liability or fault, the Parties wish to fully, finally and forever resolve, compromise and settle the Actions on the terms and conditions set forth below," the agreement explicitly reads. "Further, Intel and AMD acknowledge that for most of the last three decades, their relationship has been difficult, challenging and often acrimonious. Intel and AMD wish to change that relationship going forward, both by 'wiping the slate clean' as to all past grievances, and by approaching future grievances in a constructive manner designed to address and resolve such grievances amicably, if possible."

The business practices which Intel has agreed to abide by, are very carefully worded so as not to suggest that Intel never abided by them in the first place. For example, the agreement does not say Intel will "discontinue" any practice, or "refrain from" doing something, which would imply that it did so in the past.

It's a long section, but what it boils down to is the following:

• No rebates to OEMs for exclusivity. Intel won't enter into any deals with manufacturers that would give them benefits or awards for restricting their own freedom from being able to purchase parts from any other producer, anywhere in the world.
• Intel can make exclusionary deals, and no, that is not a typo. There are conditions that have to be met, one of which being that Intel must compete (presumably with AMD) for those deals. The explicit language states Intel is not prohibited: "...to lawfully compete on the merits for selection by the customer for any then-current design award or for satisfaction of any or all of the customer's then-current demand for microprocessors in a manner consistent with this Agreement." So if an OEM is offering exclusivity, it must offer it to both competitors, and in writing. And the winner must execute its agreement with the OEM explicitly, and in writing.
• Intel cannot reward a company for refraining from advertising AMD parts, or for not entering into marketing agreements with AMD, nor can it penalize a company by saying such an agreement with its competitor is against an existing agreement with Intel.
• Intel can't rebate anyone for using mostly or entirely Intel parts. That type of exclusivity doesn't constitute a "design award" or a marketing program, and is thus forbidden.
• Intel can compete for a design award by a manufacturer were mostly or all Intel parts are used, just as long as AMD can compete as well.
• Intel cannot create artificial technological impairments such as, for instance, a compiler state that would render some software better or faster on Intel multicores but defeated or dampened on AMD multicores.
• Both AMD and Intel may offer discounts to customers, especially volume discounts. That's been a point of contention with Intel, whose accusations against it in recent months have extended to include the ability to offer deep discounts to OEMs for high-volume purchases. As Intel executives have questioned, since when has discounting been illegal, even for a dominant player? Later in the agreement, it specifies that Intel's ability to offer retroactive discounts -- markdowns on current and future purchases based on volumes of past purchases -- may be preserved as well, depending on the outcome of current regulatory challenges worldwide.

The agreement explicitly states that Intel will not challenge the findings of the European Commission, the US Federal Trade Commission, and the New York Attorney General's office, although it may be free to challenge the language of those decisions. AMD will continue to argue against Intel's use of retroactive discounts with respect to these regulatory actions, assuming they continue.

As for any other Intel conduct, AMD says it's releasing its complaints against Intel; and Intel in turn is releasing its IP complaints. In the terms of a new covenant, neither party can hold the other party or its customers liable for past conduct.