20 May 2009

Now That’s What I Call A Fine

What was the last fine you got - £60 for speeding?  £30 for dropping litter? What about €1.1 billion? I’ll say that again - €1,100,000,000 or, in English, Eleven hundred million euros or even one thousand, one hundred million euros. It’s eye watering but that’s the fine just handed out by the European Commission to Intel, the computer chip maker. And this is only one of the fines it has received for abusing it’s dominance of the computer chip market. Apparently, they (Intel) have been making sure most of the computers built today have Intel chips in them by ‘bribing’ the manufactures.

Neelie Kroes, the EC Competition Commissioner, said: "Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years." She said Intel had abused its dominance of the microchip market to bully its customers into buying only its chips in the hope of squeezing Advanced Micro Devices (AMD), its nearest competitor, out of the market.

The EU executive said Intel paid computer makers to postpone or cancel plans to launch products that used AMD chips, paid illegal, secret rebates so computer makers would use mostly or entirely Intel chips, and paid a major retailer to stock only computers with its chips.

AMD, which alerted various regulatory bodies to Intel’s nasty little tricks,  has already successfully convinced competition authorities in Japan and South Korea to rule against Intel. Intel is appealing against the Japanese ruling.

Under European legislation, Ms Kroes could have fined Intel up to 10pc of the company's annual revenue which, based on sales of $37.6bn (£24.5bn) last year, could result in a maximum fine of almost $4bn so a 25% ‘hit’ is not a bad result!

Today's fine eclipses the previous record €497m fine brought against Microsoft in 2004 for freezing out competitors

Intel Corporation is the world's largest semiconductor company and the inventor of the x86 series of microprocessors, the processors found in most PCs. Intel was founded in 1968 and was an early developer of memory chips and this represented the majority of its business until the early 1980s. During the 1990s, Intel invested heavily in new microprocessor designs fostering the rapid growth of the PC industry. During this period Intel became the dominant supplier of microprocessors for PCs, and was known for aggressive and sometimes controversial tactics in defence of its market position, as well as a struggle with Microsoft for control over the direction of the PC industry.

The problem I have is that whilst I hate ‘dominant market abuse’, and Microsoft are right up there with the worst of them, there’s little I can do about it. I could buy a Mac instead of a PC with Windows but you’ve got all the problems with compatibility and the other thing is that people would think you were Gay! And try buying a PC without Intel chips. There are some with AMD chips or other lesser known manufacturer’s chips but they are few and far between and tend to be ‘specialist’ machines for gamers etc.

So, for the foreseeable future we’ll all still buy Intel chipped PCs with Windows software and not think too much about it and we’ll leave the  regulatory authorities to lavish huge fines on them when they’re caught manipulating the market. Problem is, some of the €1.1 billion is mine – PCs would undoubtedly be cheaper if there was fair competition – so what are you going to do with the €1.1 billion fine Neelie? I think I’d like it to go to charity – maybe buying AMD PCs with Linux for children in underdeveloped countries.  

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