EU Says It's Probing Intel Marketing Practices

EU Says It's Probing Intel Marketing Practices

By David Lawsky

BRUSSELS (Reuters) - The European Commission (news - web sites) said on Friday that it was investigating U.S. computer chip giant Intel Corp's marketing practices, which the company immediately defended as ''legal and fair.''

The Commission said it was investigating direct competitors' complaints from late last year that Intel uses its dominance to reward some customers and punish others to assure loyalty.

``This could have the effect of foreclosing the market'' to competitors, said Amelia Torres, a competition spokeswoman for the Commission.

A Commission statement said nothing had been proved yet against Intel.

``The investigation is at a very early stage and the Commission has not made any finding that Intel has actually committed an infringement of European Union (news - web sites) competition law,'' the Commission said.

Intel settled one case for anticompetitive practices with U.S. antitrust authorities in 1999, had a second U.S. investigation dropped in September and has won a private antitrust case in a U.S. appeals court. The company said that it was co-operating fully with the EU investigation.

``We have been notified and have a request for information by the director general for competition, and as is our normal policy we are cooperating,'' said Chuck Mulloy, a spokesman for Intel in Santa Clara, Calif.

Mulloy said the firm ``believes that its business practices are both lawful and fair.''

Mulloy said that the Commission had asked the company to provide information related to its bus architecture for microprocessors and its general business practices.

A bus carries information inside the computer. Its speed and interconnectivity are crucial for the operation of the computer, and for the ability of equipment made by rivals to interconnect.

Complaint From U.S. Company

The European Commission declined to identify the competitors which had complained but said one was American. Intel's largest competitor is Advanced Micro Devices of Sunnyvale, Calif.

EU sources said a second competitor which had complained was Taiwanese.

The Commission announced that it had sent requests for information to Intel's customers, but would not identify them. Intel's biggest customers are computer companies such as Dell Computer Corp, Compaq Computer Corp, Gateway Inc. and Acer Inc.

The U.S. FTC settlement focused on whether the firm was trying to withhold information to prevent its customers from becoming its rivals.

The chip business is based on cross-licensing of intellectual property. Every one of Intel's chips uses information from other chip makers and computer companies, and the products of those companies rely equally on Intel information.

In the United States, some companies alleged that they were forced to surrender some of their designs used in chips to Intel without proper compensation.

They said that when they argued, Intel threatened to put them out of business by withholding products or support. FTC officials said any computer company would go out of business without proper support from Intel, because the vast majority of chips at the heart of a computer are supplied by the firm.

When the FTC settled a case dealing with some of those issues, FTC Chairman Robert Pitofsky said the deal meant that ''if you have an intellectual property dispute, Intel cannot cut you off.''

The Commission took pains in its statement to note that its investigation was not ``taking up previous efforts by the U.S. Federal Trade Commission to investigate the same company.''

Spokeswoman Torres said that no information had been received from the FTC and that at this point European and U.S. competition agencies were not working together on the matter.

The Commission also has an investigation of Microsoft Corp.

underway. However, the two investigations focus on entirely different areas and are unrelated to each other.

Intel's chips are designed to run Microsoft's operating system software. Microsoft's software is also coordinated with Intel chips.

Intel was down $0-7/8 at $24-3/4 in early trading in the United States in line with a lower market.

(Additional reporting by Lisa Jucca)

Reuters - <A HREF="http://dailynews.yahoo.com/h/nm/20010406/tc/intel_eu_dc_3.html" target="_new">http://dailynews.yahoo.com/h/nm/20010406/tc/intel_eu_dc_3.html</A>

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  1. yeah, i saw that too. i posted a link to the wired.com story in the other forum.

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