The EC's charges: Did Intel really threaten Dell if it shifted toward AMD?

Similar conclusions about Intel's possible retaliation were drawn by Dell for over three years, according to a plurality of e-mails cited by the EC. But a statement from Dell to the European Commission on precisely this subject actually begins with the following two words: "Dell assumed."

"Dell assumed that shifting some purchases to AMD would result in a reduction of MCP. But Dell did not know precisely how much MCP would decline, in what manner and over what time period. Dell understood that Intel would not welcome such a decision, as it would be viewed as a significant shift in the historical relationship between the companies," Dell told the EC. "As indicated in the documents, the Dell team sought to forecast this negative impact across a range of potential scenarios, including some which predicted a substantial reduction in MCP, and did not rule out the possibility that such reduction might be disproportionate to the reduction in the volume of Dell's purchases from Intel."

At some point in time, Intel did pick up on Dell's conclusions, and started leveraging its own assessed fears of its retaliations to its own advantage, according to Intel internal e-mails cited by the EC. For one dinner meeting (presumably at or near Dell's Round Rock, Texas headquarters), an Intel representative was advised thus: "Somehow, with finesse, we need [Dell Senior Executive] to understand that if Dell adds AMD to their product line they no longer have a meet-comp exposure -- We have a meet comp exposure so we must prioritize opportunities on a case by case situation."

But that meeting took place in January 2003. What the EC characterizes as Dell's response to that meeting actually came (if you read the dates) over three years later, in February 2006, when as the EC describes it, Dell made statements to the press indicating that it would continue its exclusivity arrangement with Intel. The EC cited Intel's response to those press reports as though it had hit the jackpot, with one Intel exec writing to another that Dell's news constituted "the best friend money can buy."

However, I was one of the reporters at the time to whom Dell was talking about Intel exclusivity, and that's not what I was told. In fact, Dell announced its Opteron partnership with AMD in May 2005, in an event for which I was briefed by both Dell and AMD. Also, I was being prepared for a conference including several tech reporters, including myself, with Chairman Michael Dell personally. There he told me and my counterparts exactly the opposite news: that Dell was actively considering AMD for consumer PCs, in addition to the server PC deal announced the previous month.

In fact, the stories that had been published elsewhere (which the Intel executives apparently believed), were wrong, as my then-colleague Wolfgang Gruener and I accurately reported for TG Daily. However, the EC's evidence specifically points to the Intel executives' response to the incorrect news report from elsewhere, saying, "This demonstrates the direct link between Dell's policy of Intel exclusivity and Intel payments."

The EC does cite Intel's objection that its case as presented "does not legitimately support an inference of an exclusivity agreement between Intel and Dell." The alleged lack of evidence was responded to by the EC in a press release this morning, which alleged that such a gap constituted "concealment." That press release construed the alleged concealment as helping Intel to "conceal the conditions in its arrangements with PC manufacturers and Media Saturn Holdings," the German retailer that sold Intel PCs and parts exclusively for several years. However, the actual EC provisional statement makes no such allegation tying Dell to MSH -- these are actually two separate affairs.
The provisional statement does take Intel and Dell both to task for failing to keep minutes of their meetings during which their MCP rates were negotiated. "Dell also makes clear that there is no complete written agreement outlining the terms of the MCP," the statement reads.

Intel has alleged that the European Commission may be either withholding, or actively refusing to seek, evidence that may be exculpatory towards Intel. This includes documents uncovered in its ongoing civil trial in Delaware, plus evidence that should have been uncovered during a meeting between EC representatives and apparently the same Dell senior executives whose names were redacted from their memos.

But in its defense, the Commission argues that it doesn't have to take notes: "Intel's arguments are misconceived. In the first instance, there is no general obligation for the Commission to take minutes of meetings," it writes. It goes on to cite European case law: "There is…no general duty on the part of the Commission to draw up minutes of discussions in meetings or telephone conversations with the complainants which take place in the course of the application of the Treaty [of the European Community]'s competition rules."

The EC's statement on its decision also went into detail regarding Intel's alleged dealings with the aforementioned Media Saturn franchise, and with Hewlett-Packard.