Intel faces European anti-trust investigation

When standup comic Bill Hicks described England as “a socialist nightmare” he clearly had not been to Europe.

Last week the European Union (EU) extended its anti-trust investigation of Intel, saying the world’s largest chip maker had paid to hinder AMD’s business through rebates to a large European retailer for it not to carry AMD chip-based products.

As with its investigations into Microsoft, the EU claims that it is trying
to ensure the open market remains just that, and that no firm should gain a
monopoly.

“We are confident the worldwide microprocessor market is functioning normally and is highly competitive in Europe and elsewhere,” said Intel in a statement. Intel freely admits it offers marketing rebates for its products, but said this does not restrict competition.

There are differing views on whether the IT industry needs more or less
regulation. One view is that the IT business rarely offers best value and needs closely watching.

A source at a public sector IT supplier said he sold 15,000 PCs into schools and lost money on each one. “I might as well have set fire to them,” he said.

This was supposed to be evidence that even when supplying the public sector, the free market drives down prices. However, in light of investigations, it could just as easily be interpreted as an example of a deal where the real profit was found elsewhere.

The anti-regulation adherents point out that downward price pressure and margin erosion on IT hardware are inexorable.

The complex world of IT rebates and marketing development funds must be approached with caution, but if you are refreshing your PC estate remember to calculate in the rebate on every PC. If your supplier wants to make a bigger profit, you could try suggesting they get it from Intel.

For the moment at least.

See also:

Technology giants ride out the downturn

Strong companies may survive in a challenging economic climate, but others are left vulnerable  24 Jul 2008

Intel issues bullish statement on EU anti-trust case

Intel says its conduct has always been lawful, pro-competitive and beneficial to consumers  21 Jul 2008

Intel boosts profits as anti-trust charges loom

European regulators are preparing fresh case  16 Jul 2008

AMD takes £475m hit

Integration of ATI acquisition drags chip maker down  14 Jul 2008

Intel chip market domination continues as notebook sales surge

Consumer notebook sales underpin Intel/AMD revenue market share  02 Jul 2008

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