EU Regulators Raid Intel Offices

I think its more that the US population is just ignorant. Many just do not know about foreign countries, mostly because they're too wrapped up in their own problems and concerns.

 

healthy competition is good, and if Intel are found to actually be offering perks to suppliers/stores/etc. to not buy AMD products then they are breaking the law and should be punished. However part of me is saying that this may just be a publicity stunt by AMD to try and get a bad light on Intel, why complain? Well if they have evidence to back it up, sure go ahead. But they don't seem to have mentioned having any evidence...

And selling a product for under the production cost isn't illegal in the EU, huge supermarket chains, stores, and many retailers all do it. Because it helps gain more customers. The idea behind it is, buy the product under the price of production, and surround that product with others that make a lot of profit, which coerces people into buying it since they think "oh these must all be good deals". So Intel is perfectly at liberty to sell chips for under the cost of production, and in the end it only helps the consumer?

Like I said before healthy competition is a good thing, when you get to the stages of MS, where you have a choice of almost only 1 major dominating product that is sold on more then 90% of computers, developers get sloppy and release things that may not be up to standard (like Vista, released with many flaws, though I've yet to encounter many of them). And good competition between AMD/Intel would only be good for us, lowering chip costs, making new better chips to gain market share fairly.

I don't see anything wrong with Intel offering rebates either, aslong as a part of getting that rebate isn't not buying any AMD products

 

According to
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12002E082:EN:NOT

Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions

So selling below production cost with "unfair" intentions is not allowed.

 

If a relatively nominal product is sold below cost to get attention, bring other people into a store, it's called a "loss leader." Retailers do it on a daily basis, selling things from mayonnaise to bread on the cheap to get you in the store and buy their correspondingly overpriced meats and whatever else is on their mind.

If you price a product below your cost for the express purpose of running your competitor out of business, eg purposely taking a loss per unit because you know your competitor can't match it, is considered "predatory pricing." That practice is generally illegal in the US, but it is manifestly difficult to prove. We do have this concept here in the states of "probable cause," meaning that you can't just go snooping for proof because someone "really, really thinks" someone else is doing something wrong. Anytime I hear about government regulators "raiding" a private firm's documents because a competitor yells "unfair!!" it sends chills up my spine.

I guess I'm just a dumb, naive American, but if a vendor chooses to sell something below their production cost, that should be their prerogative, and as a consumer it is to my benefit. As a tangential issue, Wal-Mart here in the US is offering certain retail prescriptions for $5 each, which is known to be below their cost, but is of GREAT benefit to those who can't afford the regular price. But that's also drawn the ire of some small pharmacies who are still charging $40, $50 or more for the same drug...and some states are FORCING Wal-Mart *not* to sell prescriptions at those prices...

The point is that the government generally best serves its people by staying the heck OUT of our business.

-sd

 

Which is easily answered. You haven't paid enough attention to the MS cases. That's not the EU's fault.
Microsoft has been found guilty of abusing their monopoly in the US as well. And in quite a few Asian countries as well.
But when the EU does it, it's unfair? They should be found innocent in Europe, even though they were found guilty in the US? How does that work?
I think if you actually bothered to *look* at the MS case, you'd find that there was a hell of a lot of effort being put into determining *whether* they were guilty.
But ultimately, yes, it is the EU which makes the final decision on whether someone are guilty of breaking EU trade laws. Who else should make the decision? I think you'll find that it's also the US that decides whether a company breaks US trade laws. (If we use "The US" in the same broad blanket definition as you do "EU": That is, meaning "Any official institution or department that is in any way affiliated with the area, it's government and administration".

Except that this paragraph primarily means the opposite, that you may not impose unfair prices on your customers. That is, you may not abuse your monopoly to charge excessively high prices. Also, this only describes abusing a company's dominant position. If you're not an effective monopoly, you can price your products any way you like. And yes, it is perfectly legal to sell a product at below cost. (Not counting predatory pricing as described above, which is *also* illegal in the US)
I'm sorry if this shatters any delusions you may have had about commie Europe.

No, it's much simpler than that. It's not ignorance, just paranoia.

Americans have a deep-seated feeling that "they're out to get us". When they see a non-American institution that doesn't treat an American company with absolute deference, it can only be a conspiracy to hurt American interests and/or leech money from it.
Of course you may argue that this is caused by ignorance, but it's not the direct cause, at least.

And here we have another prime example of it:

Well, duh... A group of Americans starts going on about how the EU is just out to hurt and plunder an American company.
All I did was explain that this is not the case, that being American has nothing to do with it, and that the EU doesn't care about the few millions it might make off this deal.The USA is completely irrelevant in this thread. It's about Intel, AMD and the EU.
I only mentioned the US because it was pretty obvious that this was where all the indignation was coming from. No one in this thread cares when the EU does the same to European countries. But when they do it to an American one (Intel or MS were mentioned), it's terrible.

No, we're not out to get you, and we don't *care* that Intel is an American company. It just has to follow the same laws as everyone else when it does business within the EU. So turn down the paranoia a few notches please.

Uhuh... Letting Microsoft exploit its monopoly surely benefits everyone. Or in your case, letting Wal-mart stock one or two specific drugs at way below cost, forcing pharmacies (which know what they're selling, and sell more than those one or two) out of business, which is bad. Suddenly it's impossible to *get* anything if it isn't sold in Wal-Mart. And why would they stock it if they can't make a big enough profit out of it? They've gotten rid of their competitors in that area, so they can do as they please.
It also clearly benefited us all that RAM manufacturers were fixing their prices, didn't it? Surely, no regulatory body should have interfered with that.
And the Pentium 4 days were obviously beneficial to us all. Intel had wiped out all serious competitors, and overcharged for crappy CPU's. Back then, AMD barely managed to come back, yes, but they didn't have the economical strength to follow up on it. So now they're suffering again.
Are you saying it'd be better to let AMD die and just give the market to Intel? I don't think that would benefit anyone outside Intel.
Forcing competitors out of business is *not* good for consumers, even if it means lower prices in the short term.

I'm sorry, but a minimum of economical knowledge might be an advantage if you're going to discuss this.

It hasn't occurred to you that AMD filed the complaint a couple of years ago, *and* they provided a lot of documentation to back up their claims. And more importantly, in the couple of years since then, the EU has been working on getting information in other, more "peaceful" ways. Apparently they found enough to warrant raiding one of Intel's offices.

 

Don't get me started on the Microsoft nonsense. MS was punished for being too successful. Period. "But they were a monopoly!" Yes, they were a monopoly provider of their own intellectual property. Everyone who produces intellectual property is a de-facto monopoly provider. In that vein, Garth Brooks should be busted for being a monopoly provider of Garth Brooks songs.

Suggesting that Wal-Mart is the only place to buy prescription drugs is laughably erroneous. Let me take a browse of the streets near my own home in middle America, and the pharmacies therein....Walgreens, CVS, Target, Homeland (grocery chain).....not a mom-n-pop in the bunch, and none of them are on the verge of extinction anytime soon. And I won't even talk about the faux regulatory fence being built around mail-order/web prescription houses. So when it comes to a demand for a "minimum of economic knowledge," I think your own house needs some tidying. Wal-Mart is anything but a monopoly prescription provider. I have no particular affection for Wal-Mart, but this is not one area that bothers me at all.

On the other hand, Perhaps you need a refresher on how government-mandated price floors and ceilings create surpluses and economic inefficiencies. There's no better example of how government meddling in prices has devastated whole economic sectors in the US, such as farming, with such things as dairy supports that "guarantee" a certain price for things like milk et al. That's a digression from this topic, but the point is that, historically, the farther the goverment insinuates itself, the worse off *everyone* generally is.

Perhaps if AMD had devoted itself to producing better quality technology in that time frame, they might not be simultaneously hemmorhaging cash and technical expertise. It isn't Intel's fault that AMD's designs and product strategies over the last, oh, two years have been woefully short of meeting market expectations. Their solution? Blame Intel. And the EU is glad to help, because they just know Intel "did something bad." They just know it.

Again, more economic knowledge would be beneficial. The world semiconductor market is not "Intel and AMD." The worldwide semiconductor market is a nearly $300 billion industry, and according to 2006 data from the Gartner group, Intel represented only 11.6% of that total revenue. Elimination of AMD from that space, and their 2.8% market share, redistributes potentential revenue to that remaining 85.5% of market space that is non-Intel and non-AMD (Source: http://www.gartner.com/it/page.jsp?id=503221). The elimination of AMD, where it has shown a recent lack of techical ability to compete, might serve the market very well.

Let's keep the argument on point. Price fixing is illegal. Predatory pricing is, right or wrong, illegal. If you find collusion to fix prices, then the regulatory agencies of course should step in. But that illustrates the exception that proves the rule that the government should, in general, stay out of private business.

The payment of an incentive or the offering of a discounted price not to offer a competitor's product is neither illegal nor should it be. It is commonplace in the US for beverage manufacturers to offer attractive pricing/sales agreements to vendors provided they agree to stock their products exclusively. The vendor can opt out, and offer a mixture of vendor offerings, but just doesn't get the premium pricing. If Intel told certain vendors they'd get a premium pricing if they were exclusively Intel, I hardly see that as a problem meritorious of a government raid. I'd call it darned smart business.

-sd

 

You act like if this was not a US company, none of us would have the same feelings, I would still think its just as stupid as I do now.

The fact is AMD has made **** products for the last 4 years, and so when another company is doing better then them, they complain.

No one in the previous posts, said anything about about the EU investigating just because its an American company, the first person to say anything about it being an American company was Jalf..

I'll be the firs to admit that a lot of American are ignorant about Europe, but so are a lot of Europeans ignorant about the US..

I had a friend from the UK ask me what kind of machine gun I owned, and he was being completely serious.

Another asked me what we do with are handguns when we go into the a bank so it doesn't seems like we are trying to rob the place.. Since I am an American I MUST carry a gun with me at all time.

 

The article extract is more general than that. I think it's necessary to emphasize that the production cost issue is according to EuroNews which said that EU claimed that Intel had gone agains Articles 81 and 82 of the EC Treaty:
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12002E081:EN:NOT
http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12002E082:EN:NOT

 

You have to love this portion:

Looks to me like I, as a vendor, have to sacrifice my ability to negotiate my price with my customer because some *other* customer is necessarily deemed to be at a "competitive disadvantage" if I don't offer them the same terms.

If I agree to sell 10 widgets to X for $100, and 10 widgets to Y for $110, there should be no governmental interference in either transaction. If I were Y, I'd go hire a better negotiator. If I agree to sell and the customer agrees to pay, the government needs to stay out.

No disrespect, but I'm glad I don't live under EU rules.

-sd

 

So why haven't you cried out when they did the same to non-US companies then?

Er, yes... those are the facts, are they? No they're not. It just shows how embarassingly ignorant you are of this case

AMD filed this complaint years ago, when they were on top. Yes, before the Core 2 was launched, when they were slaughtering the Pentium 4.
They filed it because even with their far superior product, they were unable to get any decent market share.... because Intel punished customers who bought AMD products. (Well, the last part isn't fact yet, it's just what AMD suspects, and what they have been found guilty for in other countries previously)
Those are the facts.
Perhaps if you actually read more about it than this thread's subject line, it'd be easier to take you seriously.

Yep, but funnily enough, it was generally Americans whining about this, and the Bad Guy was obviously the EU, and, like I said, none of them gives a damn when European companies have to go through the same.
Can you honestly tell me that you'd complain just as much if it was, say, an Indian company being investigated by the FTC?
I think we all know that this fuss is because the company is "one of yours", and we all know the EU is so corrupt and jealous of the US that they just want US companies to fail. That seems to be what it boils down to in these discussions.

A lot of Americans do, so the last question was valid enough, wasn't it?
I fail to see how this is at all relevant though.

They were punished in the US too, so it's not just restrictive commie Europe, at least. The US does the same thing, apparently.
But no, once again, factually wrong.
They were not punished for being successful. They were punished for using their monopoly in one market, to gain a monopoly in another.
Yes, their OS has a de facto monopoly, and that is not what they were found guilty of, because that is not illegal.
But the fact that their OS has a monopoly should not affect whether, say, their browser becomes a monopoly. Or their media player. If those are going to become monopolies, it should be on their own merits, not because Microsoft sneaks them in through the back door, forcing you to use them.
That was the first case, by far the smallest one.
The big one had nothing to do with being successful at all. It had to do with refusing to let other companies write software that was able to interoperate with Windows. Microsoft kept certain protocols secret so that they could write (non-OS) software that could better interoperate with Windows than their competitors. That is illegal, because they're exploiting their dominance in the OS market, to keep competitors in other markets at a disadvantage.

What, one single anecdotal example, with no sources to back it up, proves that *everyone* are *always* worse off when a government interferes?
I call BS.
How about this one then?
Your privatized health care system, which we discussed recently in another thread, is 2-3 times more expensive than the average, while only being of average quality. This is compared to countries where it is still run by the government. A case where *lack* of government control leads to higher prices, but no benefit in efficiency or quality. What "inefficiencies" did you say the government introduced again?
As for the farming case, which economic sectors in the US have been devastated by that? The farming sector is benefiting from it, isn't it? It's mostly third-world countries that suffer because of it (and I agree that's a problem)

In any case, "government-mandated price floors and ceilings" have nothing to do with this case, because that's not what the EU is trying to do.

So please tell me, when AMD produced better quality technology, how come they were *still* hemmorhaging cash? How come Intel essentially didn't lose customers? How come, to get directly to the point, Dell *refused* to stock even one AMD system?
Could it perhaps be because if they dared to do that, Intel would punish them?
AMD thinks so. Other regulatory bodies have thought so (I believe they were found guilty of doing exactly that in Japan a while back). The EU doesn't yet think so, but has apparently over the last couple of years acquired enough evidence to warrant a raid on Intel's office to find out.

First, what does this have to do with economic knowledge?
Second, who cares about the semiconductor market? It's the x86 market that's relevant. And that *is* Intel and AMD. (VIA has what, 1.6% or something?)

Uh, lol? Finding an exception to something is not generally considered "proof" that it's true. On the contrary.

It is illegal in the EU. So if Intel wants to do business in the EU, they kinda have to follow that rule, don't you think?

Really?
So let's consider it, what are your options if you want to sell hardware?
You can insist on selling both Intel and AMD, or you can sell Intel exclusively, but do it 20% below the regular price.
Now, if you do the former, you're essentially AMD-only, because no one are going to buy Intel from you at a 20% premium.
On the other hand, AMD at the time had 12% marketshare or something, so going AMD-exclusive was hardly an option.
So you were essentially forced to sell Intel-only if you wanted to make a profitable business. That's what Dell did. And whether or not it's illegal in the US, it really leaves the smaller company with zero chance of penetrating the market.
But perhaps you can tell me why it's any business of Intel's what *else* I buy? Shouldn't they concern themselves with making good products on their own, and sell them at prices that make them attractive?
It's none of their business which grocery store I visited yesterday, where I rent movies or whether or not I have an AMD CPU in the house. If you let them interfere in that, who exactly does it benefit? The end-user? Not really. Does it strengthen the free market as a whole? Does it ensure competition better?
On the contrary, it's trying to keep competitors out of the market. Which is bad.
If you believe in free trade, then you probably know that one of the most fundamental ideas is that there must be competition. It's pretty easy to deduce from that that all measures which prevent competition are bad. Beating your competitor by offering better products at a lower price is great. But preventing others from even entering the market is bad. There *is* no free market then.

Uh yeah, and once again, we see the amazing amount of research you have put into this.....

Because the government does stay out of that. Unless, of course, you can find me a counterexample?

No disrespect, but I'm glad I don't have as many silly delusions about what EU rules *are*.