The Intel Corporation responded publicly to the publication of the European Commission’s non-confidential version of the decision against the company with a white paper on September 21, 2009. The white paper argues:
On May 13, 2009, the European Commission (“Commission”), announced its finding that Intel had violated Article 82 of the EC Treaty (“Decision”). Intel is convinced that the Commission, which serves as investigator, prosecutor and decision maker in European Community (“EC”) proceedings of this type, reached indefensible conclusions in its Decision – conclusions that are wrong as a matter of fact, law, economics, and elementary fairness. The Decision punishes innovation, risk-taking and strong price competition, and rewards failure. It seeks to take market competition out of the capable hands of the buyers and sellers that participate at every level of this market, and place it in the hands of European government regulators.
Most importantly, it essentially ignores the remarkable achievements that competition has produced in the microprocessor market over the past decade: dramatically lower prices, significantly greater output of product, and exponentially improved performance. It seeks to impose an artificial parity between Intel and its main competitor, AMD, in a market that, over and over again, has shown that it knows how to reward accomplishment, whether by Intel or AMD, and to punish failure, again regardless of which market participant failed.
Intel has exercised its right to appeal the Commission‟s Decision to an independent tribunal, the Court of First Instance of the European Community. The purpose of this paper is to address the accusations levelled at Intel in the redacted version of the EC‟s Decision which was recently made public. In doing so, we are hampered by the fact that much of the evidence Intel would like to rely on – documents and testimony of employees of AMD and the Original Equipment Manufacturers (“OEMs”) – remains subject to confidentiality protection and cannot be cited publicly. While the Commission has obtained waivers from the OEMs to make public much of the evidence it cited in the Decision, Intel is not in a position to insist that the OEMs waive confidentiality more broadly, to allow Intel to cite evidence that places the materials the Commission cited into context, proves that the accusations the Commission makes are unsupportable, and demonstrates that the market is highly competitive. As a result, at this juncture Intel‟s response to the Commission Decision must be general in nature.
However, one important OEM, Dell, which the Decision says was coerced by fear of Intel “punishment” to buy exclusively from Intel, has confirmed publicly that it always considered itself entirely free to choose to buy from AMD, without fear of reprisal or punishment. The record before the Commission contains sworn testimony of Dell executives that contradicts this essential premise of the Commission‟s case. The Decision nevertheless disregarded this evidence and instead relied on the speculation of a single lower level employee, who was not a decision maker and not even at Dell for much of the relevant period.
Dell‟s affirmation of its freedom to choose its suppliers, which undercuts the central premise of the Commission‟s case, serves as a caution that the Commission‟s one-sided depiction of the evidence will not withstand scrutiny. In this paper, we address the evidence that is publicly available and does not require the Commission‟s dispensation, or a breach of the confidentiality of a third party‟s information.
The Decision alleges that Intel implemented a strategy to foreclose AMD by engaging in two specific forms of anti-competitive conduct: (i) granting rebates1 to five original equipment manufacturers (“OEMs”) on condition that they purchase all, or almost all, of their x86 CPU requirements from Intel, and granting rebates to the German retailer, Media-Saturn- Holding GmbH (“MSH”), on condition that it only sold computers containing Intel‟s x86 CPUs; and (ii) imposing so-called “naked restrictions” upon three OEMs, by making payments to them to halt or delay the launch of, or limit the sales channels for, specific products containing AMD‟s x86 CPUs. These findings are not only factually wrong but also reflect a view of competition policy that would thwart the vigorous competition that sound antitrust policy should foster.
The full white paper can be downloaded here.