Intel's ridiculous antitrust defense

The giant chipmaker claims that European regulators are violating its human rights. What a crock

Paul Ottelini: human rights victim, waterboarded and subjected to rendition. Intel's CEO is probably languishing in a dank prison in Egypt or maybe Kazakhstan. They've attached electrodes to his fingers and made him stand on a box for hours on end while female guards laughed at his genitals.

Oh, wait. That didn't happen. The European Union is using an ordinary legal proceeding to punish Ottelini's company for its allegedly monopolistic stifling of competition in the microprocessor market. That's a human rights violation? Intel says so and is using that novel -- and frankly outrageous -- stratagem as a lever to wiggle out from under a $1.45 billion fine levied by the European Commission, the EU's executive arm.

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Unlike the U.S. Justice Department and Federal Trade Commission, the Europeans have been quick to crack down on monopolies or near-monopolies like Microsoft and Intel. Can you imagine a U.S. official saying something like "Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years"? Well, Neelie Kroes, the EU's top antitrust regulator, did say it, adding, "If we smell that there is something rotten in the state, we act."

According to the EU, Intel crossed the line between legitimate, tough-minded competition and monopolistic bullying by threatening to withdraw volume discounts to computer makers, including Acer, Dell, Hewlett-Packard, and NEC, that also bought microprocessors from rival AMD. Intel also paid manufacturers to delay the launch of AMD-based computers and paid a retailer, Media Saturn Holding, to sell only Intel-based machines, the EU said. (Media Saturn operates the Media Markt chain in Germany.)

Violating Intel's rights?
Intel has consistently denied the EU's charges, as well as somewhat similar ones levied by South Korea, Japan, and the United States. That's to be expected. But with prospects on appeal not looking great, the company has challenged the legitimacy of the EU process, likening the commission to a kangaroo court and raising the spectre of human rights violation.

The logic is twisted, but it appears that Intel is objecting to the power granted to Kroes, who supervises investigations and decides whether the target is guilty and what the punishment should be. Intel and some other companies charged with antitrust violations say that the administrative procedure doesn't allow them a full opportunity to defend themselves. In effect, they want to be treated as criminals and thus have the right to be tried in a more conventional courtroom trial.

As the New York Times pointed out in an excellent editorial this week, human rights in Europe are designed to protect the powerless and to guarantee them a day in open court. Wait a minute. Calling a company with annual sales of $38 billion powerless is, well, absurd. I have no idea how many lawyers Intel employs, but you can bet it doesn't have to resort to the services of a public defender.

(Because neither I nor other reporters have access to EU filings and Intel isn't commenting, I've had to piece the most recent legal narrative together from a number of sources, including the Wall Street Journal and the New York Times.)

Two decades of bullying
I started writing about the PC industry in the early 1990s when AMD was in terrible shape, burdened with the reputation of being a low-end, copycat manufacturer and just beginning to design chips worthy of consideration by a major manufacturer.

Even then, the industry was full of stories that Intel salespeople would threaten computer makers that had the temerity to even consider a deal with AMD. Although the charges seemed credible, if for no other reason than they were so widespread, it was a source of ongoing frustration to me and other technology journalists that none of the manufacturers who claimed to be victims of monopolistic bullying would speak on the record or provide solid documentation to back their claims.

Things have changed, of course, and companies have gone on the record. The fine was the largest ever for any breach of competition law in the European Union, previous records were levied mostly on companies involved in cartels.

I have great respect for Intel's prowess as a designer and manufacturer of microprocessors. The company's CPUs have quite literally been the engine of innovations that have changed the world. I think it is more than able to survive and thrive on its own merits, without resorting to illegal bullying. Consumers and smaller companies deserve the protection the EU is providing.

Intel has every right to defend itself and to appeal. But playing this ridiculous human rights card sounds very much like an implicit admission of guilt.

I welcome your comments, tips, and suggestions. Reach me at bill.snyder@sbcglobal.net.

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