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Otellini questions EU logic

'No consumers harmed'

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In hitting Intel with a record 1.06 billion euro fine, EU Competition Commissioner Neelie Kroes argued that the company has "used illegal anticompetitive practices to exclude its only competitor and reduce consumers’ choice." Speaking at a press conference in Brussels, she said "the whole story is about the consumer."

But Intel CEO Paul Otellini doesn't see the logic. "[Commissioner Kroes] spoke about harm to consumers," Otellini told reporters during a conference call this morning. "It's hard to imagine how consumers were harmed in an industry which has lowered the cost of computing by a factor of 100 during the term of this case, and at the same time that happened, AMD claims it's more vibrant than ever. So I don't see consumer harm or competitor harm happening here."

Well, AMD certainly believes it's been harmed. "Today’s ruling is an important step toward establishing a truly competitive market," reads today's canned statement from AMD president and CEO Dirk Meyer. "AMD has consistently been a technology innovation leader and we are looking forward to the move from a world in which Intel ruled, to one which is ruled by customers."

And it sees the EU's ruling as delivering consumers from Intel price inflation. "After an exhaustive investigation, the EU came to one conclusion – Intel broke the law and consumers were hurt," said Tom McCoy, AMD executive vice president for legal affairs. "With this ruling, the industry will benefit from an end to Intel’s monopoly-inflated pricing and European consumers will enjoy greater choice, value and innovation."

In a statement released earlier today, Otellini and Intel said that the EU "ignored or refused to obtain significant evidence that contradicts the assertions in [the commission's] decision." Asked to describe this evidence, the Intel boss said it involved statements from OEM partners as well as information from AMD itself.

"There were a number of documents from the OEMs - or between Intel and the OEMs involved in the allegations - that refuted what was claimed here. In some cases, the OEMs made statements that in fact that there were not exclusive deals and they were not under conditional terms and those documents were not allowed into the case file or not properly used by the case team in making their determination."

Many of these documents, he said, were turned up as part of the discovery process in AMD's ongoing US anti-trust lawsuit against Intel. The Register's publisher - along with The New York Times, Washington Post, and Dow Jones & Co. - has filed a motion telling a Delaware court that certain records in the case were being unnecessarily sealed.

Intel has said it will appeal the EU's decision, though Otellini said the company has yet to see the commission's 500-plus-page ruling. Intel - Otellini reiterated time and again - has merely received a two and a half page summary.

While an appeal is pending, Intel must adhere to certain remedies laid down by the EU, but Otellini said the company is still unclear on what those remedies are.

Kroes did order Intel to stop offering rebates that required OEMs to purchase fewer chips - or no chips - from competitors. But Otellini said this would be "easy" to comply with. "We don't do that to begin with," he said. "There's no change there."

Otellini was adamant that the neither the EU's ruling nor the company's other legal woes would affect the cost of end-user PCs. "Prices will continue to go down," he said. "Quality goes up. Performance goes up. There's nothing in this ruling that reverses Moore's Law."

And he doesn't see any change in the way Intel and AMD compete for business or the way OEMs make their buying decisions. "It's hard to imagine the dynamics of competition would change. Most customers buy from both suppliers today. Most customers buy more or less from each supplier depending on the quality of the products, the competitiveness of the products, and the pricing. That dynamic hasn't changed in my career at Intel, which is 35 years, and I don't expect it to change.

"I don't think a customer is going to put him or herself at a disadvantage by buying inferior or more costly products."

But again, he said that Intel is still in the dark over what's inside the EU's 500-page ruling. He indicated that the ruling could potentially change the way its European sales and marketing staff operate, but he said Intel has no intention of altering its European investments. Intel's Ireland-based manufacturing plant is its fourth largest.

Defiant to the last, Otellini argued that the EU's investigation was sparked solely by a complaint from AMD, saying that to his knowledge no customer had joined the complaint. When asked whether customers would fear reprisals if they joined, he called the notion "absurd."

"It's absurd to think we would not sell product to someone who happened to not like a particular comment or term or whatever it is. It's a very competitive business. Our customers are in most cases larger than Intel. Our customers have incredible buying power and are excellent negotiators." ®

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