It has been widely anticipated that the EU would bring new antitrust charges against Intel (NASDAQ: INTC). The FTC and other US authorities are chasing the largest chip company in the world for similar reasons. South Korea has already fined Intel for anti-competitive behavior.
The theory behind the charges is that Intel induced PC companies and their retailers to use its chips and not those from rival AMD (NYSE: AMD). According to The Wall Street Journal, "The European Union launched new antitrust charges against Intel Corp., saying the chip giant paid rebates to a major retailer to encourage it not to carry computers using chips from smaller rival Advanced Micro Devices Inc ."
If the charges are true, it shows the extent to which a company of real size, like Intel, can be its own worst enemy. Microsoft (NASDAQ: MSFT) ran into similar problems a decade ago for being too aggressive killing off competition in the browser and media player markets.
The irony of Intel's legal bind is that it almost certainly did not need to pressure or give incentives to keep AMD in a distant second place. It had the balance sheet to keep margin pressure on AMD and the engineering prowess to offer better chips.
Arrogance and carelessness often go with being in first place. This time it appears that it has caught up to Intel.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
7-18-2008 @ 12:01PM
gat517 said...
It has nothing to do with anti-trust. It is 1. EU protectionism, and 2. EU needed funds. It fines on world not EU sales.