Korea FTC Files Objection Statement Against Intel

The South Korean business daily Maeil has confirmed that the country's Fair Trade Commission has not only concluded its antitrust investigation against Intel, but has filed a statement of objections against the CPU maker. This after some US press sources had taken the headline of Korea's story, "Korea Closes Intel Investigation," too literally.

The bad news portion of Korea's FTC disclosures came first from Bloomberg News late this morning, then the San Jose Mercury News soon thereafter. The investigation period has indeed closed, and the charges and possible penalty phase has immediately begun.

According to the Korean news service KHS, the FTC there has filed what it calls an "investigation report." The contents of that report are currently private, and Intel has a period of time in which it may file a formal response. But it's a very short period of time, as KHS says Korea's FTC may meet to determine possible disciplinary action against Intel as soon as next month.

Korea is among a handful of countries that impose cash penalties for violations of its antitrust laws. Legal sources there say Korea's FTC may be within its rights to penalize Intel up to 5% of its worldwide revenue - not just relegated to Korea - assessed during the period of its anticompetitive activity. Two years ago, the Commission began investigating whether Intel's practice of rebating Korean reseller and channel customers for purchasing its CPUs exclusively, constitutes anti-competitive conduct under its antitrust law.

While not publicly acknowledging the existence of such rebates, Intel has recently made comments implying that the practice in itself is worldwide and considered quite common. In a press statement this afternoon, Intel spokesperson Chuck Mulloy implied his company does intend to respond to Korea's investigation report: "We hope to show to the commission's satisfaction the microprocessor market is functioning normally, [that] Intel conducts its business lawfully, and that our business practices are pro-competitive and beneficial to consumers."

AMD is the principal competitor whose business has allegedly been harmed. In a statement this afternoon, its executive vice president for legal affairs, Tom McCoy, remarked, "With the Korea Fair Trade Commission action, a third independent antitrust agency has charged Intel with abusing its dominant position in the x86 microprocessor market. Following formal action in Japan and Europe, global scrutiny is increasingly focused on Intel's harm to competition and consumers alike."