EU has published some of their evidence in the Intel case

[Idontcare]

drizek thanks, you don't know how much of your post actually served as a sanity check. OK so I am very much inline with you in how I have been thinking about this.

Of course the word "monopoly" is a very polarizing word, few words generate more friction and heat in these forums than the word monopoly.

So there are the schools of thought that say monopoly doesn't exist until there truly is no competition, AMD must exit x86, Via must exit x86, and only then is Intel technically a monopoly in the x86 marketspace.

And then there is the other school of thought that says a business merely need have the marketshare and dominance necessary to effect monopolistic behavior and results to be deemed a monopoly when it comes to triggering government intervention. (there's a simple phrase for this, like effective monopoly or some such, the words escape me at the moment)

Personally I could care less what you name the rose, a rose by any other name still smells as sweet.

So what I want to know is just what does it take for a business to trigger that monopoly threshold and become (for all legal and government regulatory intents and purposes) a business entity adorned with the monopoly title?

 

[Markfw]

Well, from what I have read, a monopoly is not illegal, unless it maintains that stat by illegal practices, and that is what Intel is accused of.

Personally, I believe these "rumors" as from every thing I have seen from my IT role over the past 25 years, Intel has brainwashed all of the executives at every company I have been at. I tried to get our IT guys to buy AMD, back when the Opterons were king, and all I got was "we only buy business class processors, and thats Intel". And you couldn't even buy AMD from Dell, don't tell me that wasn't engineered. Then when the lawsuits started, all of a sudden you COULD buy AMD from Dell.

All of the above is opinion, and no facts, just observations, so no flames. Also note, that until a couple of years ago, I was 100% AMD. I never forgave Intel for charging $500 for a 486-DX266. When AMD came up with the K6-166, it was all AMD for me for years. But when the C2D's came out, and kicked the X2's butt, I started converting. I am about bang/buck and performance. AMD screwed up, so they have not gottten much of my money as of late. And my next box will probably be a 920 Intel.

 

[drizek]

In order to not be considered a monopoly, you need to have viable competition. AMD, on its own merit, is viable competition to Intel. Despite being significantly smaller, as long as AMD can offer a somewhat attractive alternative to Intels products, Intel is not considered a monopoly. However, if Intel abuses its dominance of the market as well as its resources to make AMD unable to compete with it on even footing, it will get slapped.

Lets say you have an objection to some aspect of Intels way of doing business. They don't hire enough women, they dump toxic waste on furry animals, whatever. The free market says you should vote with your wallet by boycotting Intels product. For most companies, this is an easy thing to do. Just move over to the next item on the shelf and it should be a reasonable alternative.You buy the competitors product and you discourage the company from being evil. However, lets say you go to a store to pick up an i7, but hesitate when you remember what Intel does to kittens. You look down the shelf to find an alternative but there is nothing there other than some Semprons and VIAs selling for $500. At this point, Intel is a monopoly and deserves to be slapped.

As long as there are $99 Athlon II X4s on the shelves, Intel is not a monopoly. However, any attempt to remove them from shelves is illegal and is considered monopolistic behavior.

As for a quantitative measure of whether something is a monopoly, wiki says this: http://en.wikipedia.org/wiki/S...tory_Increase_in_Price

So basically if Intel increased the price of the i5 from $200 to $220, would this result in a drop in sales of the i5 and would it increase sales of the Phenom II 965? If yes, Intel is not a monopoly. If people continue to buy it despite the higher price and AMD sales don't go up, they are a monopoly. In the case of Dell, as an example, it is obvious that Intel could have charged whatever they wanted for their CPUs without a resulting increase in AMD sales, since Dell never sold them to begin with.

 

[Idontcare]

Interesting. And what happens in those rare situations (which the semiconductor industry happens to fall into) in which capital costs for increasing one's ability to supply the markets is such that your competitor can increase prices from $200 to $220 but you can't supply the market with any more PhII 965's because you are tapped out at the fab already?

For many other industries the capital expenses are not so substantial and capacity is far more of a fluid situation.

Its like trading stocks, AMD vs. Berkshire Hathaway (BRK-A)...I can trade AMD stock in reasonable quantities (10's, 100's, 1000's) with a reasonable trading account size ($10k), but to even buy one share of BRK-A I need a minimum $99k in my account. Changes the ballgame.

I remember about 10 yrs ago, after DEC self-imploded and its carcass was subsequently feasted upon before Compaq bought them, Intel procured some of DEC's IP (which the PPro chips just so happened to violate at the time, litigation was in process) including members of one of the design teams as well as rights to the alpha chips themselves. But the courts stipulated that Intel had to allow a second source manufacturer produce the alpha chip to avoid anti-trust issues. That second source producer was Samsung.

So I'm wondering, given the precedence set by the courts in that example, would the courts actually have the ability/authority to force Intel to fab/produce AMD's chips (at an equitable price of course) in the event that AMD loses access to leading edge fab technology (because of cost, $5B fabs and what not) while Intel sprints ahead of the rest of the industry beyond 11nm or so?

This is getting more into the hypothetical "what would anti-trust resolution look like" phase of the Gedankenexperiment here.

 

[drizek]

I think at that point it becomes an issue of time. Right now, as happens every year, video cards are flying off of the shelves at or above MSRP because there is no competition. Nobody ever gets sued for this though because by the end of the year nvidia will have a response.

If it does become an issue, the government can give incentives to AMD to set up fabs and then slap Intel. In Europe, AMD set up a fab in Dresden and then Intel got slapped. New York is helping AMD set up fabs, so is there a slapping on the way? It does seem to be a simple and effective way of helping AMD stay in the game while keeping the government checkbooks balanced.


Alternatively, the government might break Intel up the way AMD broke itself up. GF competes against IF and fabless AMD competes against fabless Intel. I actually think this would be a good thing for the industry

 

[Schmide]

Originally posted by: Idontcare
So what I want to know is just what does it take for a business to trigger that monopoly threshold and become (for all legal and government regulatory intents and purposes) a business entity adorned with the monopoly title?

Any company that has a dominant position can be considered a monopoly. You don't even have to control more than 50% of the market. It is less how much market share you have and more what you do with your ability to manipulate the market with the leverage your share gives you. This can range from market dumping, setting the price artificially low to gain market share only to raise the price once you've forced your competitors into a lesser position. To illegal contract/strong arm/kickback practices, basically keeping or inflating market share through coercion. The latter is what Intel has been found to be allegedly be guilty of.

 

[TurtleCrusher]

All i'm getting from this is that Intel screwed up, did some illegal price war and got caught. We don't know everything, but we know that. Getting butthurt and comparing CPUs back then have nearly nothing to do with the topic at hand. Everyone's argument means nothing. The ruling is done and Intel didn't fight it.

If they weren't guilty, they would have fought it aggressively and appealed this heck out of a guilty ruling.

Anyone saying Intel should be innocent should leave here and post at TFNN permanently, because you lack intelligence on so many levels.

 

[IlllI]

still waiting for someone to provide some insight as to what does AMD gain from all of this. one person briefly made a comment, then the topic got caught up with a bunch of other e-ranting etc.
so i'll ask again: what does AMD gain from this? the EU is going to get all the money, right? So its not like AMD is in better position after this ruling in their favor.

 

[Idontcare]

Originally posted by: IlllI
still waiting for someone to provide some insight as to what does AMD gain from all of this. one person briefly made a comment, then the topic got caught up with a bunch of other e-ranting etc.
so i'll ask again: what does AMD gain from this? the EU is going to get all the money, right? So its not like AMD is in better position after this ruling in their favor.

Correct. The EU fine, 1.5B, is money for the EU's coffers.

None of goes to reimburse the victims, customers who bought computers in the timeframe over which the the alleged activities occurred.

I think it is relevant to establish that AMD is not viewed to be the victim here, the victim is generically referred to as being the consumer and the means by which they were victimized was thru a reduction in market innovation owing to Intel's actions.

The reduction in innovation can actually be restricted to solely refer to Intel's own innovation, the pace of it anyways, as having slowed-down or not sped-up as much as it might have otherwise sped-up during this timeperiod...which then resulted in less innovation in the markets than there would have otherwise been (even if that innovation would have been from Intel) and as such the consumers in that market were the victims.

It is an interesting way to go about establishing crime as it means the EU doesn't have to prove AMD suffered, nor do they have to prove AMD would have benefited had Intel not engaged in these activities, all the EU has to prove is that the means and method of the activities occured and then they can say those means and methods stifle innovation (of all players in the market) and as such there were victims (consumers) and a fine is warranted.

Another thing I find intriguing is that a company logo, stock ticker, and letterhead does not commit any actions. No logo dumps toxic waste on furry animals. People who work for that logo make the decisions, be it to dump toxic waste on snowbell the kitty or to engage in illegal activities.

So what I don't understand is why the EU is only fining the company when the actions of the company were actually generated by the people managing it. The decision makers are culpable, suing corporate letterhead hardly penalizes any of the people who made the decisions there.

It is better than doing nothing, if crimes were committed, but does fining Intel's checking account actually help the victims (the tsunami relief fund did, this EU fine does nothing like that)?

And does it bring any of the perpetrators of the crime to justice? (many of those decision makers don't even work for Intel anymore, they could give a damn who sues Intel now)

And does it really serve as a deterrent to future corporate crime? (I would say no, since we are here discussing a crime that occurred at Intel in recent times and I'm pretty sure history is littered with other corporations having been fined for illegal activities and those examples apparently did not deter Intel's decision makers this time, so why would we expect them to be detered in the future just because of this newest example being added to that list?)

Does the EU's decision benefit AMD, or VIA? Again not directly, none of this money goes back to them to stabilize or shore-up their bank accounts. And besides, giving money to AMD now does nothing to help the employees and shareholders who were negatively impacted by Intel's decision makers back then.

So even if AMD the company was awarded damages it isn't like those monies help the people who were negatively impacted by Intel's actions. It would help the current employees and current shareholders at AMD, and penalizes the current employees and current shareholders of Intel...many of whom may have lost little in the illegal activities (or gained little) as they simply weren't employees or shareholders of either company at the time of these activities.

This is where the EU's fine really puts weight to the argument that this is basically a shakedown, Intel is the target because they have a flush bank account. You may not agree with that thought, but of all the things the EU could have done here versus what they decided to do here, it really makes you wonder why there is so little concern to get justice to the victims and making sure the actual perpetrators of the crimes are brought to justice...

If an employee spills water on the floor at the grocery store and you slip and fall we all sue the grocery store (lawyers know to go after the money) and not the employee (they work at a grocery store after all, how wealthy can they be?). And what does the grocery store do after losing the lawsuit? Tells there employees once again, as they have repeatedly done, please don't leave liquids spilled on the floor.

 

[Schmide]

Originally posted by: Idontcare
So what I don't understand is why the EU is only fining the company when the actions of the company were actually generated by the people managing it. The decision makers are culpable, suing corporate letterhead hardly penalizes any of the people who made the decisions there.

This is what defines an incorporated entity, the crimes of the few cannot be separated from the company as a whole. Sure you can blame the few, but the penalty applies to the one (corporation).

As for the damages, that's the cost of doing unfair business. Breaking the law incurs the fines. AMD has it's civil lawsuit in which damages will be awarded directly to AMD.

 

[Idontcare]

The DOJ had no problem figuring out which Samsung guys specifically needed to go to jail.

Sixth Samsung exec headed for jail for DRAM price-fixing

To me that is justice. The people who made the decisions to commit illegal actions while hiding behind, or in the name of, a business entity are the ones who get penalized.

I also don't mind that the company itself pays a fee/fine to remove the ill-gotten equity from the their balance sheets, that only stands to reason as well. But who should that ill-gotten equity be returned to? The coffers of the very same government group that did nothing for more than 5 yrs while all this activity was going on around them, seemingly unaware of any of it?

I can't count the number of dram, epson, netflix, and HP class-action claims forms I've gotten in the mail over the past ten years. Sure they never amounted to much, one of them netted me around $45 IIRC, but at least the victims in those circumstances got some form of reciprocation. If all that money just disappeared into the bowels of the DOJ then I'd have an issue with that too.

Look at Bernie Madoff, no issues with him (not just his business) and his wife being stripped of their ill-gotten wealth while running an illegal business. I wish they'd pursue that policy with all the decision makers of the banks that collapses and needed bailout monies. Same too with this Intel deal, punish the guilty, not just the current employees of a business ran by a whole new outfit of decision makers.

 

[drizek]

Do you think the fact that Samsung is a Korean company with Korean CEOs played a role in that decision? I have a hard time thinking that it didn't, particularly in light of what the Bush administration was doing back in 03:

A recent case concerns South Korean computer chips. The market for computer chips was once dominated by American companies, but now everyone has gotten in on the act, which is one reason innovation and prices continue to improve. In particular, South Korea hosts Hynix Semiconductor, which makes a wonderful dynamic random access memory chip, or DRAM. The problem is that this pits the company against US chip maker Micron Technology, which claims that Hynix is competing unfairly by benefiting from government subsidies. What's the answer? In a free market, the answer is to improve one's product and become more efficient. But when a protectionist administration is in charge, there's an easier route: file a complaint with the government and hope to skew the market in your favor. That is exactly what American chip makers have done, and they have swayed the International Trade Commission, which has approved antidumping duties of 45 percent, or perhaps as high as 65 percent, against South Korean chips.

http://mises.org/freemarket_detail.aspx?control=463


The US is so corrupt right now, in terms of anti trust laws, environmental laws and workers rights laws(among other things), that corporations don't look at laws as rules but as fees. If it is cheaper to pay the fine for dumping toxic waste than it is to dispose of it properly, then the company would rather break the law than actually deal with it. And if they are lucky, they won't be caught at all.

I was looking at a list of companies that defrauded the federal government, and virtually every contractor you can name is on that list, with fraud in the hundreds of millions and billions of dollars. Yet the government continues to give these companies more contracts, from Lockheed Martin to Blackwater. The fine for fraud is 3x the damages, so if they get caught less than 33% of the time, defrauding the government is both profitable and encouraged. We absolutely should be pursuing criminal charges for these sorts of cases, but it almost never happens. In some cases, such as with the contractors, particularly ones working in Iraq, the fraud borders on treason, and the companies get nothing but a fine.

 

[Idontcare]

Originally posted by: drizek
Do you think the fact that Samsung is a Korean company with Korean CEOs played a role in that decision? I have a hard time thinking that it didn't, particularly in light of what the Bush administration was doing back in 03:

Hmmm...it is true the DOJ did not prosecute Micron nor any employees of Micron despite their having been equally culpable in their role in the dram cartel. (they pleaded out, turned witness...of course I suppose that could have been the cover?)

So what are you saying here, DOJ isn't likely to really pursue Intel as Intel is "one of our own"?

 

[Schmide]

Originally posted by: Idontcare
The DOJ had no problem figuring out which Samsung guys specifically needed to go to jail.

Sixth Samsung exec headed for jail for DRAM price-fixing

To me that is justice. The people who made the decisions to commit illegal actions while hiding behind, or in the name of, a business entity are the ones who get penalized.

Compared to the 750million payed out by the companies. Chump change. 10 months maximum. Slap on the wrist.