Intel Corporation: European Union Antitrust Case

            
 
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Case Details:

Price:

Case Code : ECON030 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Pricing/ Competition/ Monopoly/ Duopoly/ Business Environment/ Business Ethics
Case Length : 25 Pages
Period : 2001-2009
Pub. Date : 2009
Teaching Note : Not Available
Organization : Intel Corporation
Industry : Computers, IT and ITeS
Countries : USA

Abstract:

On May 13, 2009, the European Commission (EC) imposed a € 1.06 billion fine on the world's largest semiconductor company, Intel Corporation (Intel), for violating the antitrust policies of the European Union. This was considered to be the highest fine ever charged in the history of EC.

Intel was accused of engaging in anti-competitive business practices for gaining dominance in the microprocessors market by driving out competitors like Advanced Micro Devices (AMD) from the market. One of the major charges against Intel was that it gave conditional rebates to Original Equipment Manufacturers (OEMs) for committing themselves to buying all the x86 microprocessors from Intel.

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It also made payments to Media-Saturn Holding, a German retailer, on the condition that its stores sold only Personal Computers (PCs) with Intel's microprocessors. Another important charge against Intel was that it allegedly made payments to PC manufacturers to delay or cancel the launch of other PCs equipped with x86 microprocessors manufactured by Intel's competitors and limiting the distribution channel, thereby controlling the availability of these products in the market.

The EC investigations began after AMD lodged a complaint in 2001. After several years of investigations, EC found Intel guilty and levied a historic fine and gave a ruling that required Intel to stop offering illegal rebates to OEMs and indulging in other anti-competitive business practices intended at driving AMD out of the microprocessors market.

Some analysts felt that the EC ruling would enable AMD to gain access to the market largely dominated by Intel. On the other hand, some analysts felt that the ruling would be an impediment to innovations in the industry and would result in affecting the European economy.

Issues:

Study and analyze the antitrust allegations against Intel and the company's response thereof.

Understand the concept of competition and pricing.

Discuss and debate whether Intel was behaving in a monopolistic way.

Understand the importance of knowing rules of competition by companies operating in foreign countries.

Examine the challenges of being a market leader in the wake of EC's ruling on Intel

Discuss the ethical issues related to the case.

Contents:

  Page No.
Introduction 1
Background Note 3
Intel's Initial Troubles with the EC 5
EC Issues 'Statement of Objections' 6
EC Issues 'Supplementary Statement of Objections' 8
Appeal to the Court of First Instance 9
Intel Responds to the SSO 10
EC Slaps Fine 11
Intel's Response to EC's Decision 12
The Road Ahead 13
Exhibits 15

Keywords:

Competition, Monopoly, Duopoly, Anti-competitive, Antitrust, Pricing, Rebates, market dominance, competitive advantage, Abusive marketing, Innovation, Original Equipment Manufacturers, European Union, European Commission, Microprocessor, Federal Trade Commission, Intel, Advanced Micro Devices, AMD

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