AMD Bites Back, Sues Intel - AMD's Complaint Filing

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In AMD’s Complaint, the company cites several questionable business practices that Intel is using. I quote from AMD’s site:

• Forcing major customers to accept exclusive deals,
• Withholding rebates and marketing subsidies as a means of punishing customers who buy more than prescribed quantities of processors from AMD,
• Threatening retaliation against customers doing business with AMD,
• Establishing quotas keeping retailers from selling the computers they want, and
• Forcing PC makers to boycott AMD product launches.

There is nothing illegal about these practices per se, but if carried out by a monopoly there is definitely is a problem. AMD will still need to prove that Intel is a monopoly. Intel using “rebates” to hold onto the dominant market share may not be enough evidence.

AMD claims that Intel’s rebates to manufacturers are the primary mode of control that Intel uses. The rebates reduce the cost of Intel chips significantly, but are dependant on manufacturers staying loyal to Intel and meeting sale quotas. The rebates are retroactive, meaning that switching processor distributors is difficult. If Dell, for example, was to introduce one model with an AMD chip, Intel could keep all rebates and increase the cost of past and future processor purchases. Dell would lose a significant amount of money by selling PCs at a price dependant on the rebate, then not receiving it later.

However, Intel retaliation does not just include withholding rebates. AMD claims Intel has made threats that include charging a discriminatory price to unfavorable companies, offering great price discounts to that company’s competitors, influencing retailers to not carry that company’s computers, or simply delaying a rebate.

In the 48 page document, AMD runs through the list of major computer manufacturers and accuses Intel’s rebates and retaliation for their preference of Pentium and Celeron chips. They start with Dell, a company that has never bought a single AMD chip:

“In discussions about buying from AMD, Dell executives have frankly conceded that they must financially account for Intel retribution in negotiating pricing from AMD.”

Dell executives admit Intel retaliation adds significantly to the cost of using AMD. After all, Gateway met with Intel retaliation for that reason and was “pounded into guacamole.” All the Gateway country stores I know of closed, though the company is still making AMD computers under the eMachines brand.

The Complaint speaks about some Japanese companies that dumped AMD. Interestingly, the antitrust suit is going particularly well overseas, and governments may be dropping Intel chips.

Next: Intel Suffers in Japan and Governments >>
 

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Comments On: AMD Bites Back, Sues Intel

· It looks like things have really been heating up since this article was published....    · ya, i lost respect for AMD. They get thier asses beaten to a pulp and instead of...    · Actually, last month was a record for AMD. It was the first month that they outsold...    · AMD Really has to stop whining about Intel's success, I no-longer have any respect...    · Yeah, it's kind of disgusting. I'd like them to stop whining, but it's not making me...    · well, no. professional sports would be amess. but in business jerks payother jerks...    · amd all the way!!!! hands down amd beats out intel in every benchmark right across...    · I think that if intel has done these alleged acts to beat out amd courts should rule...   >>> Post your comment now!

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