JAPAN’S CORPORATE WATCHDOGS CENSURE INTEL

[Anonymous]

Japan’s corporate watchdog censures Intel
Regulators tell U.S. chip giant to stop curbing
competition

 March,
2005

TOKYO – Japan’s
anti-monopoly watchdog issued a warning to U.S. chipmaker Intel Corp. on
Tuesday, demanding that the company stop curbing competition in the
microprocessor chip market by pressuring Japanese clients to buy its
chips.

Japan’s Fair Trade
Commission didn’t impose any fines on Intel, but said the U.S. company could
face prosecution if it doesn’t change its ways. Intel was given 10 days to
respond.

The FTC said the
semiconductor maker broke antitrust laws as early as 2002 by trying to stifle
rivals in central processing units, or CPUs — the microprocessor chips that
comprise the silicon brain of all computers.

“Intel is engaging
in actions to keep CPUs made by competing companies from being used,” the FTC
said in a statement. “These actions … are substantially limiting the CPU sales
sector for domestic personal computer makers.”

It ordered the
company to conduct periodic inspections and hold training sessions to put an end
to the practice.

The decision
follows a raid in April 2004 by the FTC of Intel’s three Japanese offices on
suspicions the company was improperly urging Japanese personal computer makers
not to use microprocessor chips manufactured by its U.S. rivals, including
Advanced Micro Devices Inc. and Transmeta Corp.

Lower prices,
money offered
The FTC said Intel had offered lower prices and marketing
money to Japanese PC makers Hitachi Ltd., Sony Corp., Fujitsu Ltd., Toshiba
Corp. and NEC Corp., which use Intel chips and brand their products with “Intel
Inside” and “Centrino” labels. Centrino is Intel’s wireless networking
chipset.

Intel made the
deals on condition that the PC makers either exclusively use Intel chips or
limit the use of rivals’ chips to 10 percent, the FTC said.

Intel’s share of
the CPU market in Japan rose to 90 percent in 2004, from 78 percent in 2002,
according to estimates by market research firm IDC. Advanced Micro Devices’
share fell to 8 percent, from 18 percent, over the same period.

Intel defended its
practices after the ruling. “Intel continues to believe its business practices
are both fair and lawful,” Intel said in a statement.

“Competition
regulators should only intervene where there is evidence of harm to consumers,”
and the FTC did not sufficiently weigh such principles, the statement quoted
Intel vice president and general counsel Bruce Sewell as saying.

The company was
deciding its next steps, the statement said.

Legal
proceedings possible
If Intel rejects the FTC’s recommendations to drop
its practices, the watchdog has the authority to launch legal proceedings
against it. It was not immediately clear what punishment it may face if the
matter goes to court. It’s unclear what potential consequences Intel could
face.

If Intel decides to
appeal the FTC’s ruling, it could be months to years before any action is taken.
The FTC’s case against Microsoft Corp., which the commission accused of unfair
licensing arrangements with Japanese manufacturers, has been held up in
government hearings to assess the U.S. software maker’s appeal.

Santa Clara,
California-based Intel also has faced similar probes by antitrust regulators
into its business practices in other parts of the world, including in the United
States and Europe.

On Tuesday, a
European Union spokesman said regulators in Brussels were continuing their own
investigation into Intel.

[Author]

March 11, 2005 at 10:10 AM