Yes, gentle reader, it’s that time again! Today’s the day you’ve been looking forward to all week: ACT Online’s “This Week in Antitrust” Friday feature covering antitrust-related news highlights with a special focus on the microchip industry. Figuring prominently in this most recent selection of relevant and topical articles is video card superstar NVIDIA, who is pulling out all the stops in its significant support of the FTC’s on-going attack of Intel and their competing Graphical Processing Unit (GPU) line of chipsets. Also of note are rumored monopolistic practices in the food industry, a promise by a European company to play nice in response to antitrust charges, and an analysis of Google-Yahoo monopoly myths.
NVIDIA/Intel – The Case for Innovation: FTC, NY State, EU v. Intel| NVIDIA.com
As one of the premier manufacturers of Graphical Processing Units (GPUs for short), NVIDIA has long worked to create top-of-the-line video cards that integrate smoothly with computer chipsets manufactured by other industry heavies such as microchip titan Intel. After a long honeymoon of playing nice, NVIDIA found itself being locked out of key gateways to integrate their complex and expensive-to-develop GPUs with Intel’s various motherboard chips and decided to join in the dog-pile of litigation descending on Intel by the likes of the European Union and, closer to home, the Federal Trade Commission. By way of a backgrounder, the helpful people at NVIDIA have created a website specifically dedicated to tracking the on-going investigation against Intel for monopolistic practices, including the following trio of bad behaviors:
- First, Intel has harmed competition in the markets for CPUs and GPUs. Intel has already paid fines and settlements totaling nearly $3 billion to address its anticompetitive conduct in the CPU market.
- Second, consumers have not been able to choose from among the range of potentially available technologies that one would see in a healthy, functioning market. Technologies like NVIDIA’s game-changing graphics and chipset products have been kept in short supply or blocked from the market entirely by Intel’s anticompetitive practices.
- Third, and perhaps most importantly, Intel’s conduct has stifled future innovation, inhibiting the development of new processor technologies that incorporate faster and more powerful graphics-based computing. This graphics-based computing not only provides a more enjoyable graphics experience for the consumer, but has the potential to improve our ability to achieve important social and economic goals through research and development.
Never let it be said that Intel is nothing if not a dominating force in the chip-fab market, no. But is it entirely fair to fling claims of monopolistic practices and bring forth yet another lawsuit yearning for a solid judgment that Intel is indeed acting in a manner that requires the intervention of the antitrust goons? In this case, Intel feels strongly enough that it is doing what is true and righteous to enlist a bit of “turn around is fair play” logic. Once again, some further explanation of what’s what by NVIDIA:
NVIDIA and Intel are in ongoing litigation pending in the Court of Chancery for the State of Delaware. At issue in those lawsuits is the scope of the companies rights’ under two license agreements signed in 2004, including whether Intel can block NVIDIA’s ability to connect its chipsets to Intel’s Nehalem CPUs.
A move to block NVDIA’s linking to Intel’s newer CPUs, such as the Nehalem line, would spell sure disaster for the GPU giant. So, NVIDIA is fighting back with it’s own counter-suit, seeking, among other things, “a legal declaration that the license agreements should be enforced as they were agreed to by the companies and that it is legally able to make chipsets compatible with Intel’s Nehalem CPUs. Likewise, NVIDIA is a seeking an injunction to stop Intel’s public statements that NVIDIA is not licensed to make chipsets for Nehalem.” There’s plenty more legal wrangling in store if you’ll simply click on the above linked site and take but a few moments to parse the facts for your very own self. I highly recommend it as a bit of pre-weekend gray matter exercise, if for no other reason.
NVIDIA/Intel – NVIDIA Launches Website Detailing Antitrust Case Against Intel- Hothardware.com
And for a less-tainted viewpoint on the NVIDA/Intel death-match, we turn to Joel Hruska and his timely yet topical review of NVIDIA’s explanatory (and possibly inflammatory) website. He writes on why there’s so much acerbic finger-pointing going on between the two chip behemoths:
There could also be a bit of personal enmity at work here. The two companies have been headed for a collision for several years. NVIDIA’s chipset division was a competitive threat against Intel’s while published benchmark comparisons left Intel lurching along like an arthritic, three-legged elephant. Then Intel announces that it’ll be getting into graphics and changing the entire way 3D rendering is done. NVIDIA counters those statements with some choice comments on how Intel’s GPU looks like something from five years ago, waits until Intel’s Atom is really making waves, and launches Ion. Two months later (immediately following legal paper-waving), Intel gets caught red-handed distributing internal FUD about NVIDIA’s Ion.
And how is Intel faring under the withering assault on its extremely dominant CPU market share?
As for Intel, the company has already taken quite a bit of heat from multiple governments and investigations worldwide. In all such cases Intel has maintained that it competes fairly and that its strategies do not harm consumers. To be fair, the company’s activities have never been found to be illegal in a court of law, but none of the administrative bodies (including the FTC) have ever found Intel’s argument compelling enough to not launch an investigation once the question of whether or not monopolistic abuse occurred was set before the organization.
Not so good for Intel, it seems. For now, both sides could be accused of playing “he said, she said” but with the US Federal government and European Union breaking out the Little Acme Junior Gman Investigation Kit, complete with heavy duty magnifying glass, Intel might end up with the short end of the stick. At the very least, there is probably some hand-wringing at headquarters as Intel struggles to catch up in the smartphone integrated chipset market.
Monsanto/Food Industry, et. al – Food sector faces sweeping antitrust investigation- Los Angeles Times
As luck would have it, not all of the antitrust legislation in the pipeline is focused on Intel. Seems there is an investigation by the U.S. Attorney General into widespread unfair and monopolistic practices in the food industry. P.J. Huffstutter reports on how the business of big food is coming under scrutiny for the missing money between farmer and consumer. From Ankeny, Iowa:
Speaking at a public workshop organized by the Justice Department and the U.S. Department of Agriculture at a community college, [U.S. Atty. Gen. Eric] Holder told the packed conference hall that “concrete action” would emerge from the unusual coordination between the two federal agencies.
The gathering was the first in a yearlong series of public meetings to examine whether consolidation in the food sector, and alleged monopolistic practices in agriculture, are driving food prices higher.
The government is also trying to ferret out reasons for the sometimes vast gaps between what farmers are paid for the food they produce and the retail prices that shoppers pay at the grocery store. Time and again, federal officials underscored that the government was going to push for more transparency in the food sector’s business practices.
Farmers who had gathered for the workshop heartily voiced their feelings that big food business is squeezing the smaller rural farmer out of the picture. Assistant U.S. Atty. Christine Varney, Holder’s antitrust chief offered some welcome ideas on how the Federal government will help them:
Varney, whom many people here say is spearheading the Justice Department’s ramped-up probe into big-business antitrust concerns, promised that the government was undertaking an “unrelenting quest to find the correct balance” within the agricultural industry.
That would mean, she said, ensuring healthy competition in the food sector — which would allow fair deals for farmers and fair pay for agriculture workers in processing factories, while making sure the public had “food on their table that’s safe, healthy and a decent price.”
That sentiment was met with cheers in the conference center at the Des Moines Area Community College. Every seat was full, occupied by hundreds of farmers and unionized food workers.
You can find additional reporting on this move by the US government to make sure big ag is playing fair in a related article, Ag antitrust enforcement vowed, at The Omaha World-Herald. As far as Monsanto is concerned, they are doing nothing but help small American farmers.
Monsanto officials defended the company’s market dominance in the seed industry, saying the firm had done nothing wrong. Its success, they said, was due to strong demand for so-called Roundup Ready seeds it developed to produce crops capable of tolerating its herbicide Roundup. The company’s patent expires in 2014.
“That’s why we have such a high market share,” Jim Tobin, vice president of industry affairs at Monsanto, told the crowd. “It’s not because you have to have Roundup Ready to grow soybeans. It’s because farmers chose it.”
Electricite de France - EU drops EDF antitrust charges | Yahoo! News
Aoife White, AP Business Writer, has the inside track on how far a promise can go in getting one’s self moved from the “Naughty” to the “Nice” list and reveals just how this slight-of-hand worked for one huge corporation.
BRUSSELS – European Union regulators on Wednesday dropped antitrust charges against French power company Electricite de France after it pledged to amend contracts with key corporate customers.
In a deal made legally binding Wednesday, EDF is promising to make sure that every year many large electricity users can pick rival suppliers. It will also allow them to resell power to others.
EDF can be fined up to 10 percent of yearly revenue if it breaks these commitments.
Also of interest is what EDF was forced to include in its promise. White clarifies for the constant reader:
EDF settled the dispute by agreeing that some 65 percent of the electricity that it sells under contract to large customers will return to the market every year because contracts will end or customers will be able to opt-out of the contract for free.
Future contracts with major energy users can’t be longer than five years unless the customer can opt out without cost at least every five years.
EDF must also now stop blocking its customers from buying part of their power needs from other suppliers — and stop preventing customers from reselling electricity.
Not exactly a “Get out of Jail Free” card but good enough, it would seem, to keep EDF on track and back in the black for a while.
Google/Yahoo! – Debunking the Google-Yahoo Antitrust Myths | The Precursor Blog
And what exactly are these “antitrust myths” about search megaliths? Scott Cleland hopes to answer that exact query in his aptly titled article and starts things off on the right foot with this first of many “myths” needing a bit of debunkification:
Myth #1: There can’t be an antitrust problem as long as consumers are just one click away from a competitive search engine.
- This is intentional misdirection.
- Google does not get paid by users, but by advertisers and websites.
- The antitrust concern here is not about “competition” for free search engine use, but competition for paid search advertising.
Google is exploiting the “Internet choice paradox” where because users have near infinite choices to reach Internet content, they assume content businesses must have as much choice in advertising to Internet users as users have in reaching content. They don’t.
And to prove it, Cleland has 4 other pertinent items to round out his quintet of mythical reasons why he thinks that ”This antitrust investigation of Google is much deeper, broader, and more serious than the market appreciates.” Onwards, and upwards!
