*NEWS* A WORLD OF PROBES INTO INTEL

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*NEWS* A WORLD OF PROBES INTO INTEL

 user 2005-08-12 at 10:52:00 am Views: 77
  • #12444
    A World of Probes into Intel 
    Add South Korea to the list of countries
    investigating the chip giant’s business practices.

    Be careful what you
    wish for. After Intel spent billions over past decade to make its brands one of
    the best known in the world, it’s beginning to look like there’s no place the
    giant chipmaker can escape scrutiny.
    The Santa Clara (Calif.) company disclosed in a regulatory filing on Aug. 8
    that the South Korean Fair Trade Commission is looking into its rebate and
    marketing practices, joining similar investigations in Japan and the European
    Commission. Investigators around the globe are probing claims that Intel has
    abused its dominant market share in microprocessors to force customers into
    exclusive contracts that may have illegally shut out rival Advanced Micro
    Devices . AMD is suing Intel in the U.S. and Japan.
     
    For Intel, the question now is how hot can the hot seat get? The increasing
    international scrutiny could prompt the eerily silent Federal Trade Commission
    to launch its own investigation. Sources say U.S. investigators have been
    following the actions taken around the world but haven’t yet opened a formal
    inquiry of their own.
     
    COORDINATED RAIDS. AMD also is trying to get state officials to take an
    interest in Intel’s business practices. The smaller chipmaker has been quietly
    laying out its case before state regulators who filed antitrust claims against
    Microsoft years ago. Massachusetts, Texas, New York, and Connecticut spearheaded
    the initial investigation against Microsoft. It’s not clear whether any are
    considering action against Intel.
     
    Intel says it’s complying with a Korean request for documents relating to
    its practices. The request came in June, just a few weeks before teams of
    investigators from the European Commission’s competition directorate on July 12
    carried out a series of coordinated raids across at least four countries on
    Intel’s European offices and those of a half-dozen PC makers and distributors.
     
    In March, Japan’s Fair Trade Commission found that Intel violated fair
    competition laws there by restricting the amount of business its customers could
    do with AMD. Intel in April accepted the ruling and agreed to change some of its
    practices but didn’t admit to any wrongdoing. Japanese regulators say they’ll
    continue to monitor interactions between Intel and PC makers to ensure
    compliance.
     
    “FAIR AND LAWFUL.” Intel has faced the scrutiny of U.S. regulators before.
    The FTC closed a three-year investigation into Intel’s business practices both
    in 1993 and in 2000 without taking action. A call for comment to the FTC’s
    Bureau of Competition wasn’t returned.
     
    Intel says it hasn’t heard of any U.S. probes into its practices. “Twice,
    once in 1993 and then in 2000, [regulators] found nothing to pursue,” says
    spokesman Chuck Mulloy. “I wouldn’t want to speak for them today, other than to
    say we think our business practices are fair and lawful.”
     
    AMD spokesman Dave Kroll declined to comment on the status of any potential
    FTC investigation. “The FTC has been and is supportive of fair competition in
    the processor sector and is monitoring the situation closely,” Kroll says.
     
    MAKING ITS CASE. Legal pundits say U.S. regulators are unlikely to act
    anytime soon, despite the increasing pressure Intel faces overseas. Domestic
    officials, they point out, typically wage battles against monopoly abuse only if
    they can demonstrate that consumers were harmed by the alleged behavior.
     
    Still, that doesn’t mean Intel is safe. AMD’s lawyers have been meeting
    with state regulators to try to convince them to take on the case. Several state
    agencies could launch their own investigations in the next few months. The
    states that could be interested in the Intel case include New York, New Jersey,
    Missouri, and California. AMD plans to share any potential “smoking gun”
    documents it finds with federal, state and overseas regulators ahead of its own
    antitrust trial likely next year in Delaware. And it has subpoenaed e-mails
    between Intel and PC makers.
     
    The European case, however, may come to head long before any of those
    scenarios. Since European antitrust law gives more consideration to the impact
    of monopolistic behavior on competitors than U.S. law does, it’s widely believed
    the EC will bring a case against Intel as early as October.
     
    CAUGHT FLATFOOTED. The EC launched its first inquiry into Intel’s practices
    in 2000 at the behest of AMD. The probe heated up again in 2004 after AMD filed
    another complaint and provided additional evidence of what it says has been a
    ceaseless campaign to harm its business instead of competing fairly.
     
    The trouble couldn’t come at a worse time for Intel. The chipmaker has been
    caught flatfooted by the success of AMD’s Opteron server chip in particular and
    by the growing strength of AMD’s desktop and notebook offerings. AMD’s elegantly
    designed dual-core chips and surrounding architecture have become a hit with
    customers. Server makers Hewlett-Packard, Sun, and IBM , among others,
    increasingly are rolling out new products with AMD inside
     

    Intel remains resolute. Chief Executive Paul Otellini says the chipmaker is
    confident things will be “resolved favorably to Intel.” With so many things
    piling up against it, though, if Intel execs weren’t worried before, they should
    be now.