AMD’s War with Intel Becomes a Street Brawl

The war between Intel and AMD this week became almost entirely rhetorical, following the European Commission’s action last week, charging Intel with abuse of its dominant power status on that continent. While US antitrust law holds companies to a higher standard of conduct once they have attained monopoly power through non-illegal means, EU law sets the bar somewhat lower, where the test is dominant power.

But just what is dominant power, legally speaking? A Wall Street Journal editorial last Tuesday raised the question. It’s easy to call Intel’s 80% market share there “dominant;” but the article asked, why should a company expect to compete its little heart out using any means necessary, until it reaches 80% or some such point, after which time it can no longer be allowed to compete the same way?
“This leaves companies in the absurd position of being free to compete as hard as possible until they reach a certain market share – at which point their hitherto legal behavior becomes unlawful.”

That got AMD’s blood boiling. In a response statement, AMD’s Executive Vice President for Legal Affairs Thomas McCoy said, “Here’s where the history of American antitrust law comes in. In the 2004 Trinko decision, Justice Scalia made a careful distinction: Mere monopoly status is not illegal. But the use of anticompetitive conduct to gain or to maintain a monopoly is illegal, because such practices block the dynamic potential of competition.

This is the distinction employed by the European authorities in their statement of objections against Intel. They did not base their case merely on the size and success of Intel. Rather, the authorities concluded that Intel waged a sustained campaign to leverage its monopoly status to coerce computer makers into boycotting AMD.

“Thus, as the European Commission explained, Intel’s conduct is ‘bad for competition and consumers,”‘ McCoy continued. “And that’s exactly the kind of conclusion that justified the century of landmark U.S. antitrust decisions spanning the decades from Standard Oil, through Alcoa and AT&T, to Microsoft.”

It’s important to note here that the European Commission has not actually reached a conclusion – not in the legal sense – about Intel’s conduct. It can only reach a conclusion after it has given Intel a chance to make its case heard at an oral hearing, which Intel has indicated it wishes to do.

Equally important is the fact that the EC, time and again with various antitrust and competitiveness cases, has chosen to distinguish itself from US antitrust law by saying it does not borrow EU statutes from US code. Much of the EC’s incentive for pursuing Microsoft over the past few years is believed to have been sparked by that company’s settlement with the US Justice Dept., after a district court judgment that would have seen the company broken in two, fell apart.

But AMD’s rhetoric didn’t end there this week. Yesterday, the company released what it claimed to be an economic study concluding that Intel “extracted monopoly profits” from the sale of microprocessors worldwide, during the ten-year period between 1996 and 2006, estimated at $60 billion.

AMD released a summary of a report from Dr. Michael Williams of ERS Group, which includes the…. Read it all from the source : Beta news

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One Response

  1. AMD shouldn’t let its lawyers decide and produce its branding and marketing. The full-pager in the Wall Street journal really sealed it for me…what a missed opportunity to communicate positive, meaningful actions for customers and consumers (instead of tisk-tisking Intel). I’ve written about this in some detail on DIM BULB, at http://dimbulb.typepad.com, if you’d like to check it out.

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