South Korea looking inside Intel business practices

The Korea Fair Trade Commission has requested documents from Intel Corp. that pertain to the company's rebate and marketing programs already under scrutiny in the U.S. and Japan, Intel revealed in its quarterly filing with the U.S. Securities and Exchange Commission Monday.

Intel said it is complying with a June request from South Korea's market watchdog to hand over materials related to Intel's discussions with South Korean PC manufacturers.

Intel rival Advanced Micro Devices Inc. (AMD) filed an antitrust lawsuit against Intel in the U.S. in June charging that the larger chip maker is improperly using its marketing budget to exclude AMD's chips from PC and servers. Specifically, AMD accused Intel of cajoling vendors into using mostly Intel processors through the selective distribution of marketing funds to Intel-friendly vendors and threats of retaliation for purchasing AMD's chips.

The suit builds on an investigation by Japan's Fair Trade Commission that found Intel allocated marketing funds to Japanese PC vendors such as Sony Corp. and Fujitsu Ltd. only if they agreed to purchase fewer processors from AMD. Intel did not deny the actual charges and agreed to end certain business practices, but disagreed with the negative characterization of those practices by the Japanese investigators and denied any wrongdoing.

Intel's marketing programs are also being looked at by the European Commission, which raided the offices of Intel and PC vendors in Europe last month as part of a "competition investigation," the Commission said at the time.

Separately, Intel disclosed on Monday that the U.S. Internal Revenue Service (IRS) believes Intel owes an additional US$400 million plus interest in taxes for 2001 and 2002 related to the way Intel accounts for taxes on export sales. Intel plans to dispute the proposed adjustment, it said. Intel is also disputing previous IRS findings that the Santa Clara, California, company owes $600 million in additional taxes on export sales during its 1999 and 2000 fiscal years.