Intel faces European anti-trust investigation

The EU believes Intel attempted to harm AMD's business through the use of rebates

When standup comic Bill Hicks described England as “a socialist nightmare” he clearly had not been to Europe.

Last week the European Union (EU) extended its anti-trust investigation of Intel, saying the world’s largest chip maker had paid to hinder AMD’s business through rebates to a large European retailer for it not to carry AMD chip-based products.

As with its investigations into Microsoft, the EU claims that it is trying
to ensure the open market remains just that, and that no firm should gain a
monopoly.

“We are confident the worldwide microprocessor market is functioning normally and is highly competitive in Europe and elsewhere,” said Intel in a statement. Intel freely admits it offers marketing rebates for its products, but said this does not restrict competition.

There are differing views on whether the IT industry needs more or less
regulation. One view is that the IT business rarely offers best value and needs closely watching.

A source at a public sector IT supplier said he sold 15,000 PCs into schools and lost money on each one. “I might as well have set fire to them,” he said.

This was supposed to be evidence that even when supplying the public sector, the free market drives down prices. However, in light of investigations, it could just as easily be interpreted as an example of a deal where the real profit was found elsewhere.

The anti-regulation adherents point out that downward price pressure and margin erosion on IT hardware are inexorable.

The complex world of IT rebates and marketing development funds must be approached with caution, but if you are refreshing your PC estate remember to calculate in the rebate on every PC. If your supplier wants to make a bigger profit, you could try suggesting they get it from Intel.

For the moment at least.