EC Charges Intel with Abuse of Dominant Power

This morning, Intel issued a statement from its senior vice president and general counsel, Bruce Sewell: "We are confident that the microprocessor market segment is functioning normally and that Intel's conduct has been lawful, pro-competitive, and beneficial to consumers," Sewell writes. "While we would certainly have preferred to avoid the cost and inconvenience of establishing that our competitive conduct in Europe has been lawful, the Commission's decision to issue a Statement of Objections means that at last Intel will have the opportunity to hear and respond to the allegations made by our primary competitor."

Sewell goes on to make a sort of counter-allegation: that the EC's case is being catalyzed not by the European microprocessor market, but by AMD.

"The case is based on complaints from a direct competitor rather than customers or consumers," he writes. "The Commission has an obligation to investigate those complaints. However, a Statement of Objections contains only preliminary allegations and does not itself amount to a finding that there has been a violation of European Union law. Intel will now be given the chance to respond directly to the Commission's concerns as part of the administrative process.

"The evidence that this industry is fiercely competitive and working is compelling," Sewell concludes. "When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly."

BetaNews asked Intel spokesperson Chuck Mulloy this morning to address, as best he could, the specific allegations raised by the EC Statement.

While he was not in a position to reveal much of the Statement's confidential information, "I can say that we expect to demonstrate to the Commission that rebates and other forms of discounting are not illegal," Mulloy told BetaNews, "and that they had nothing to do with AMD's performance in the market as a company. As we've said many times, AMD's performance has been the result of their business decisions and their ability to execute. We believe their current position in the market demonstrates that.

"After six years of investigation, we have a clear picture of what concerns the EC," Mulloy continued, "and we will now work to respond to their concerns. In our view, the information they have on costs may not be complete or could be inaccurate. We will work to correct that."

For its part this morning, AMD's executive vice president for legal affairs, Thomas McCoy, issued this statement: "Consumers know today that their welfare has been sacrificed in the illegal interest of preserving monopoly profits. Intel has circled the globe with a pattern of conduct, including direct payments, in order to enforce full and partial boycotts of AMD. The EU action obviously suggests that Intel has, once again, been unable to justify its illegal conduct."

Upon seeing AMD's press release this morning, Intel's Mulloy followed up with BetaNews by saying it omits important information supplied by the EC, and that it may be in error by characterizing the Statement's charges against Intel as a "preliminary conclusion that Intel has engaged in three types of abuse in a dominant market position."