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Paul Merrell

Antitrust Week Continues: EU Slams Intel With $1.45b Fine - Law Blog - WSJ - 0 views

  • Most likely, we grant you, it was coincidence. But we couldn’t help notice the timing: Two days after the DOJ’s new antitrust head, Christine Varney, publicly repudiates her predecessors by pledging to ramp up enforcement on so-called “single-firm” monopolistic behavior, the European Union takes a sledgehammer to Intel Corp., fining it $1.45 billion for alleged monopolistic activity. The fine is the largest ever assessed for monopoly abuse. Click here for the WSJ story, from Charles Forelle; here for the NYT story; here for the NYT story; here for the FT story; here for the Commission’s statement; here for Intel’s response.
    • Paul Merrell
       
      See my earlier Diigo bookmark quoting the DG Competition statement that it had coordinated with the U.S. Justice Dept. in its simultaneous and ongoing investigation of INtel.
  • John Pheasant, an antitrust practitioner at Hogan & Hartson in London and Brussels, told the Law Blog that some of the evidence does “not look very good for Intel,” adding that “if the facts are there, this type of conduct is more likely to be regarded as abusive if practiced by a dominant company. . . .”
  • On Varney’s statement from earlier this week, Kroes said the Justice Department’s stance gave her a “huge positive feeling. The more competition authorities joining us in our competition philosophy, the better it is.”
Paul Merrell

EC Ruling: Statement by Intel President and CEO Paul Otellini - 0 views

  • "Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace – characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal." "We do not believe our practices violated European law. The natural result of a competitive market with only two major suppliers is that when one company wins sales, the other does not. The Directorate General for Competition of the Commission ignored or refused to obtain significant evidence that contradicts the assertions in this decision. We believe this evidence shows that when companies perform well the market rewards them, when they don't perform the market acts accordingly."
  • "Despite our strongly held views, as we go through the appeals process we plan to work with the Commission to ensure we're in compliance with their decision.
Paul Merrell

Rapid - Press Releases - EUROPA - 0 views

  • Did the Commission co-operate with the United States on this case? The Commission and the United States Federal Trade Commission have kept each other regularly and closely informed on the state of play of their respective Intel investigations. These discussions have been held in a co-operative and friendly atmosphere, and have been substantively fruitful in terms of sharing experiences on issues of common interest.
  • Where does the money go? Once final judgment has been delivered in any appeals before the Court of First Instance (CFI) and the Court of Justice, the money goes into the EU’s central budget, thus reducing the contributions that Member States pay to the EU. Does Intel have to pay the fine if it appeals to the European Court of First Instance (CFI)? Yes. In case of appeals to the CFI, it is normal practice that the fine is paid into a blocked bank account pending the final outcome of the appeals process. Any fine that is provisionally paid will produce interest based on the interest rate applied by the European Central Bank to its main refinancing operations. In exceptional circumstances, companies may be allowed to cover the amount of the fine by a bank guarantee at a higher interest rate. What percentage of Intel's turnover does the fine represent? The fine represents 4.15 % of Intel's turnover in 2008. This is less than half the allowable maximum, which is 10% of a company's annual turnover.
  • How long is the Decision? The Decision is 542 pages long. When is the Decision going to be published? The Decision in English (the official language version of the Decision) will be made available as soon as possible on DG Competition’s website (once relevant business secrets have been taken out). French and German translations will also be made available on DG Competition’s website in due course. A summary of the Decision will be published in the EU's Official Journal L series in all languages (once the translations are available).
Paul Merrell

Rapid - Press Releases - EUROPA - 0 views

  • The Commission has found that Intel excluded its competitor in two ways: through illegal loyalty rebates by paying manufacturers and retailers to restrict the commercialisation of competitors' products.These illegal actions were designed to preserve Intel's market share at a time when their only significant rival - AMD - was a growing threat to Intel's position. This threat was widely recognised by both computer manufacturers and in Intel's own internal documents seen by the Commission. The computer manufacturers involved are Acer, Dell, HP, Lenovo and NEC. The retailer involved is Media Saturn Holdings, the parent company of Media Markt.
  • Naturally, the Commission favours strong, vigorous price competition, including by dominant firms. However, Intel went beyond normal price competition by giving rebates to computer manufacturers on the condition that they bought all, or almost all, of their CPUs from Intel. Intel also made direct payments to a major retailer – Media Markt - on the condition that it stocked only computers with Intel CPUs.
  • Just to give you one example: in one case, a computer manufacturer took up only a small part of an offer by AMD of free CPUs because acceptance of all the free CPUs offered would have led that computer manufacturer to breach the conditions of its agreement with Intel and to lose rebates on all its much more numerous Intel purchases.
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  • Intel made direct payments to computer manufacturers to halt or delay the launch of products using their rival's chips, and to limit their distribution once available. The Commission has specific, documented examples, of Intel paying other manufacturers to, for example, delay the launch of an AMD-based PC by six months, and to restrict the sales of AMD-based products to certain customers.
  • The Commission Decision contains evidence that Intel went to great lengths to cover-up many of its anti-competitive actions. Many of the conditions mentioned above were not to be found in Intel’s official contracts. However, the Commission was able to gather a broad range of evidence demonstrating Intel's illegal conduct through statements from companies, on-site inspections, and formal requests for information.
  • Finally, I would like to draw your attention to Intel's latest global advertising campaign which proposes Intel as the "Sponsors of Tomorrow." Their website invites visitors to add their 'vision of tomorrow'. Well, I can give my vision of tomorrow for Intel here and now: "obey the law".
Paul Merrell

European Union fines Intel a record $1.45 billion - Los Angeles Times - 0 views

  • European regulators today levied a record antitrust fine of $1.45 billion against Intel. Corp. for abusing its position as the world's dominant computer chip maker. The fine comes after nearly two years of investigation by the European Commission into allegations that the Santa Clara company offered improper rebates and other discounts to discourage companies from buying microprocessors from its smaller rival, Advanced Micro Devices Inc. Complaints from AMD triggered the case.
  • The fine tops the $1.23-billion fine European regulators levied against Microsoft Corp. last year for abusing its dominant position in computer software.
  • "Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace – characterized by constant innovation, improved product performance and lower prices. There has been absolutely zero harm to consumers. Intel will appeal."
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  • The European ruling, which had been expected in recent days, comes as the U.S. Federal Trade Commission continues its own antitrust investigation against Intel, which was opened in June 2008. AMD also has sued Intel in federal court.
  • "The relief that the Europeans imposed I think will provide an excellent guide to U.S. enforcers as they try to determine what to do about Intel's exclusionary conduct," Balto said today.
Paul Merrell

EurActiv.com - EU to oblige Microsoft to offer competitors' browsers | EU - European In... - 0 views

  • "If the Commission's preliminary conclusions as outlined in the recent statement of objections were confirmed, the Commission would intend to impose remedies that enabled users and manufacturers to make an unbiased choice between Internet Explorer and competing third party web browsers," Jonathan Todd, spokesperson for EU Competition Commissioner Neelie Kroes, told EurActiv.
  • This line stems from the mistakes the Commission recognised it had made by imposing remedies on Microsoft in the Media Player case (see background). Indeed, although Microsoft is now obliged to offer a version of Windows without Media Player, for the most part, users are opting for the readily available bundled offer, which provides extra software at the same price. "That remedy was rubbish," acknowledged an official in the Commission's competition department. 
Paul Merrell

MICROSOFT CORP (Form: 10-Q, Received: 01/22/2009 09:02:43) - 0 views

  • In January 2008 the Commission opened a competition law investigation related to the inclusion of various capabilities in our Windows operating system software, including Web browsing software. The investigation was precipitated by a complaint filed with the Commission by Opera Software ASA, a firm that offers Web browsing software. On January 15, 2009, the European Commission issued a statement of objections expressing the Commission’s preliminary view that the inclusion of Internet Explorer in Windows since 1996 has violated European competition law. According to the statement of objections, other browsers are foreclosed from competing because Windows includes Internet Explorer. We will have an opportunity to respond in writing to the statement of objections within about two months. We may also request a hearing, which would take place after the submission of this response. Under European Union procedure, the European Commission will not make a final determination until after it receives and assesses our response and conducts the hearing, should we request one. The statement of objections seeks to impose a remedy that is different than the remedy imposed in the earlier proceeding concerning Windows Media Player.
  • While computer users and OEMs are already free to run any Web browsing software on Windows, the Commission is considering ordering Microsoft and OEMs to obligate users to choose a particular browser when setting up a new PC. Such a remedy might include a requirement that OEMs distribute multiple browsers on new Windows-based PCs. We may also be required to disable certain unspecified Internet Explorer software code if a user chooses a competing browser. The statement of objections also seeks to impose a significant fine based on sales of Windows operating systems in the European Union. In January 2008, the Commission opened an additional competition law investigation that relates primarily to interoperability with respect to our Microsoft Office family of products. This investigation resulted from complaints filed with the Commission by a trade association of Microsoft’s competitors.
Paul Merrell

Opera executive praises EU move | Beyond Binary - CNET News - 0 views

  • In a case of convenient timing, Opera Software's top developer happened to be in CNET's office just after Microsoft disclosed that the European Union has objected to Microsoft's bundling of a Web browser into Windows.
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    Opera quotes about DG Competition announcement.
Paul Merrell

Rapid - Press Releases - EUROPA - 0 views

  • MEMO/09/15 Brussels, 17th January 2009
  • The European Commission can confirm that it has sent a Statement of Objections (SO) to Microsoft on 15th January 2009. The SO outlines the Commission’s preliminary view that Microsoft’s tying of its web browser Internet Explorer to its dominant client PC operating system Windows infringes the EC Treaty rules on abuse of a dominant position (Article 82).
  • In the SO, the Commission sets out evidence and outlines its preliminary conclusion that Microsoft’s tying of Internet Explorer to the Windows operating system harms competition between web browsers, undermines product innovation and ultimately reduces consumer choice. The SO is based on the legal and economic principles established in the judgment of the Court of First Instance of 17 September 2007 (case T-201/04), in which the Court of First Instance upheld the Commission's decision of March 2004 (see IP/04/382), finding that Microsoft had abused its dominant position in the PC operating system market by tying Windows Media Player to its Windows PC operating system (see MEMO/07/359).
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  • The evidence gathered during the investigation leads the Commission to believe that the tying of Internet Explorer with Windows, which makes Internet Explorer available on 90% of the world's PCs, distorts competition on the merits between competing web browsers insofar as it provides Internet Explorer with an artificial distribution advantage which other web browsers are unable to match. The Commission is concerned that through the tying, Microsoft shields Internet Explorer from head to head competition with other browsers which is detrimental to the pace of product innovation and to the quality of products which consumers ultimately obtain. In addition, the Commission is concerned that the ubiquity of Internet Explorer creates artificial incentives for content providers and software developers to design websites or software primarily for Internet Explorer which ultimately risks undermining competition and innovation in the provision of services to consumers.
  • Microsoft has 8 weeks to reply the SO, and will then have the right to be heard in an Oral Hearing should it wish to do so. If the preliminary views expressed in the SO are confirmed, the Commission may impose a fine on Microsoft, require Microsoft to cease the abuse and impose a remedy that would restore genuine consumer choice and enable competition on the merits.
  • A Statement of Objections is a formal step in Commission antitrust investigations in which the Commission informs the parties concerned in writing of the objections raised against them. The addressee of a Statement of Objections can reply in writing to the Statement of Objections, setting out all facts known to it which are relevant to its defence against the objections raised by the Commission. The party may also request an oral hearing to present its comments on the case. The Commission may then take a decision on whether conduct addressed in the Statement of Objections is compatible or not with the EC Treaty’s antitrust rules. Sending a Statement of Objections does not prejudge the final outcome of the procedure. In the March 2004 Decision the Commission ordered Microsoft to offer to PC manufacturers a version of its Windows client PC operating system without Windows Media Player. Microsoft, however, retained the right to also offer a version with Windows Media Player (see IP/04/382).
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    It's official, hot off the presses (wasn't there a few minutes ago). We're now into a process where DG Competition will revisit its previous order requiring Microsoft to market two versions of Windows, one with Media Player and one without. DG Competition staff were considerably outraged that Microsoft took advantage of a bit of under-specification in the previous order and sold the two versions at the same price. That detail will not be neglected this time around. Moreover, given the ineffectiveness of the previous order in restoring competition among media players, don't be surprised if this results in an outright ban on bundling MSIE with Windows.
Paul Merrell

EU/Antitrust cases from 39514 to 39592 - 0 views

  • COMP/39.530 - Microsoft (Tying) Microsoft 14.01.2008 MemoAntitrust: Commission initiates formal investigations against Microsoft in two cases of suspected abuse of dominant market position 14.01.2008 Opening of Proceedings Concerns economic activity: C33.2
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    When the DG Competition statement of objections regarding the tying of MSIE to Windows appears, it should appear here, under COMP/39.530.
Paul Merrell

Update: EU hits Microsoft with new antitrust charges - 0 views

  • January 16, 2009 (Computerworld) Microsoft Corp. confirmed today that European Union regulators have formally accused the company of breaking antitrust laws by including the company's Internet Explorer (IE) browser with the Windows operating system. "Yesterday, Microsoft received a Statement of Objections from the Directorate General for Competition of the European Commission," the company said in a statement on Friday. "The Statement of Objections expresses the Commission's preliminary view that the inclusion of Internet Explorer in Windows since 1996 has violated European competition law." According to Microsoft, the EU claimed that "other browsers are foreclosed from competing because Windows includes Internet Explorer."
Paul Merrell

EU looks into telecoms blocking Internet calls - International Herald Tribune - 0 views

  • European Union regulators are looking into whether mobile phone operators who block customers from making inexpensive wireless calls over the Internet are breaking competition rules. The European Commission, the EU antitrust authority, has sent questionnaires to phone companies asking what "tools" they use to "control, manage, block, slow down or otherwise restrict or filter" Internet-based voice calls. The EU deadline for responding to the survey was Tuesday. The questionnaire, obtained by Bloomberg News, does not identify any companies. Some mobile carriers have blocked services that use voice-over-Internet protocol, or VoIP, which allows users to make calls over the Web. Companies may be seeking to stop customers from accessing applications, like eBay's Skype, to defend voice revenue from the less expensive Internet services, Carolina Milanesi, research director for mobile devices at Gartner, the research company, said.
    • Paul Merrell
       
      Building a Connected World --- The Role of Antitrust Law and Lawyers.
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    Superficially, this sounds like an application of the principles won by DG Competition in the Court of First Instance's Commission v. Microsoft interoperability decision. But note that here we deal with an investigation into deliberately-created interop barriers rather than those maintained by withholding full communication protocol specifications from competitors. Notice that the investigation encompasses throttling of internet connections for particular uses, an increasingly common practice by Comcast and other ISPs in the U.S., where both VOIP and P2P file-sharing are targeted uses. E.U. and U.S. antitrust law are similar, as efforts to harmonize antitrust law on both sides of The Pond are now decades old; this move does not bode well for bandwidth throttling in the U.S., particularly when aimed at throttling competition. It takes no giant mental leap to apply such principles to big vendor-dominated IT standards bodies that deliberately create or maintain interop barriers in data format standards. Indeed, DG Competition Commissioner Neelie Kroes has already served notice that interop barriers in standards-setting is an item of interest.
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