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Intel Accused of Anti-Competitive Practices in India (Updated)

Updated, 8/28/19, 1pm PT: Intel responded to our queries and provided this response:

Intel respects fair competition and is committed to supporting all of its partners around the world so that they can be successful. Our business practices are lawful and pro-competitive, and we are cooperating fully with the commission.

Original Article, 8/28/19, 8:30am PT:

(Image credit: Intel)

Intel might have 1.3 billion people to answer to in the coming months. Live Law reported yesterday that the Competition Commission of India (CCI) ordered the Director General to investigate the company following a complaint from Matrix Info Systems. At issue: Allegations that Intel changed its warranty policy to give its authorized resellers an advantage over their competitors, which effectively doubled the cost of its processors as a result.

Remember that most people using Intel processors aren't the company's true customers--they probably had to buy the CPU from a reseller. This means they're covered by a retailer's warranty, if one applies, but they're also covered by the manufacturer's warranty. Intel offers a global warranty in most of the world, but CCI said the company adopted an India-specific policy in 2016. That policy had more of an effect than you might expect.

The updated policy only allowed consumers in India to seek help directly from Intel if they bought their CPU from an Intel Authorized Distributor in India. That might sound redundant, but it's an important restriction because it means Indian consumers who imported a CPU from an authorized reseller outside India can't seek warranty service from the company within India. They have to request service from the country of purchase.

Matrix Info Systems told CCI this gives Intel Authorized Distributors in India an unfair advantage over their non-sanctioned competitors. It's not hard to imagine why: choosing to buy a CPU from a company that Intel hasn't partnered with in India makes it much harder to request support if something goes wrong. Anyone worried about buying a defective CPU, or encountering issues after purchase, would have to take that into account.

Intel told CCI that it adopted this new warranty policy to help Indian consumers. CCI said in the order:

"Intel has stated that in India, there is a large unorganized market and parallel importers (like the Informant) often underinvoice goods or import old and salvaged parts disguised as new products. Thereafter, when the product stops working, Intel receives request for replacement of such old and used products. This, according to Intel, not only creates a burden upon it as it only has limited number of service centres in India, but also affects consumers' interest adversely."

Unfortunately for Intel, counterfeit processors don't appear to be the only things that "affect consumers' interest adversely." CCI said that Matrix Info Systems provided a price comparison for Intel CPUs sold by authorized distributors in India, Japan, the U.S., and Germany. Here's the breakdown:

CountryPrice (INR)
India29,610
Japan18,334
U.S.11,307
Germany11,757

That means a CPU purchased from an Intel Authorized Distributor costs 2.6x as much as the same processor would from a reseller in the U.S. Intel doesn't set these prices--it merely offers pricing guidance via MSRPs--but it does get to decide who it partners with for the Intel Authorized Distributor program. If those partners have an unfair advantage, such as easier-to-claim warranty service, things start to look more than a little suspect.

CCI also dismissed Intel's argument that its India-specific warranty policy is warranted (no pun intended) by counterfeit processors

"Such problems of counterfeit goods/ sale of old products disguised as new may be subsisting in various parts of the world and not in India alone. Further, merely because Intel may have received a few requests in India for replacement of some old Boxed Micro-processors which may have been sold as new, Intel cannot, in a market as large as India, subject every consumer and/or parallel importer/reseller to suffer the inconvenience of claiming its warranty service outside India, even if the product is eventually purchased from an Intel authorised distributor, but outside India. Further, in the digital world today, technology may enable quick verification by Intel of such counterfeit, old or used products."

CCI's decisions are prima facie, which according to Cornell Law School means they are "sufficient to establish a fact or raise a presumption unless disproved or rebutted." They're just preliminary opinions, basically, and the Director General's investigation could lead to some changes. But right now it seems that CCI is leaning towards Intel unfairly favoring some resellers via the India-specific warranty policy introduced in 2016.

We've reached out to Intel and will update this post if the company responds.

  • jeremyj_83
    Intel accused of Anti-Competitive Practices 😲....must be Wednesday.
    Reply
  • GetSmart
    Parallel importers are not happy about having being left out of the warranty loop and deal with better(higher) prices from authorized sellers.
    Reply
  • Groveling_Wyrm
    So the rough translation is...

    There is a flood of fake products flooding into India. Intel is seeing them come into their service centers, as the fakes they are. So Intel looses money by having to replace these fake parts. Intel then tries to protect itself and stop this loophole by enacting this rule, so that they don't have to service these fake products, and someone gets butthurt.

    Much ado about nothing...this shouldn't go anywhere....
    Reply
  • redgarl
    Groveling_Wyrm said:
    So the rough translation is...

    There is a flood of fake products flooding into India. Intel is seeing them come into their service centers, as the fakes they are. So Intel looses money by having to replace these fake parts. Intel then tries to protect itself and stop this loophole by enacting this rule, so that they don't have to service these fake products, and someone gets butthurt.

    Much ado about nothing...this shouldn't go anywhere....

    No, you don't get it. People are forced to buy an Intel CPU at 2.6X times the prices of the MSRP because if they don't, they cannot get customer support and their warranty are invalid when dealing with the foreign dealer. For example, you are in India and order from Newegg Germany because the imports fees are less than the markup in your country, then if the product is defective, unless this happens in 30 days to return your product to Newegg Germany, you are stuck with no warranty in India... forcing people in India to incur additional markup costs just because of Intel decision.

    There is obviously a deal with Intel and Indian suppliers and this is what the Indian authority is fighting over.

    Good news is AMD Ryzen will solve this whole mess for Intel... they will lose massive market share.
    Reply
  • bloodroses
    redgarl said:
    No, you don't get it. People are forced to buy an Intel CPU at 2.6X times the prices of the MSRP because if they don't, they cannot get customer support and their warranty are invalid when dealing with the foreign dealer. For example, you are in India and order from Newegg Germany because the imports fees are less than the markup in your country, then if the product is defective, unless this happens in 30 days to return your product to Newegg Germany, you are stuck with no warranty in India... forcing people in India to incur additional markup costs just because of Intel decision.

    There is obviously a deal with Intel and Indian suppliers and this is what the Indian authority is fighting over.

    Good news is AMD Ryzen will solve this whole mess for Intel... they will lose massive market share.

    But as the article states, That is not due to Intel since they set their prices at MSRP. If India goes after anyone, it should be the resellers that are ripping their customers off. They are really grasping at straws trying to say it's Intel's doing that the authorized resellers in India are crooks.

    To put it a better way. You buy a Chevrolet from a dealership. Your oil change appointment comes do. You take your car in to have the oil done and they charge you $125 instead of the normal $50 -60 it'd cost at other oil change places (which may not be covered under warranty). Is it General Motors at fault for ripping you off, or the dealership? You could always do the oil change yourself for like $20-30, but that of course will end the warranty. You could always just skip the oil change all together, but we all know where that will eventually end....


    As with AMD; good job, they finally just about caught up to Intel for performance and it's about time. They are a hot item right now for personal users and will be until Intel finally responds. In the business world though, it's still Intel dominated due to compatibility. If you really think AMD is going to dethrone or run Intel out of business, you obviously have never followed history in regards to the Athlon/FX years.
    Reply
  • TJ Hooker
    Groveling_Wyrm said:
    There is a flood of fake products flooding into India. Intel is seeing them come into their service centers, as the fakes they are. So Intel looses money by having to replace these fake parts.
    Uh, why would Intel be honoring their warranty and replacing fake parts?
    Reply
  • TJ Hooker
    bloodroses said:
    But as the article states, That is not due to Intel since they set their prices at MSRP. If India goes after anyone, it should be the resellers that are ripping their customers off. They are really grasping at straws trying to say it's Intel's doing that the authorized resellers in India are crooks.
    Yeah, if there is anything unethical going on here my first guess would be price fixing/gouging among the authorized resellers. I guess you could maybe place some blame on Intel depending on what the requirements are for becoming an authorized reseller. E.g. if it is expensive/arduous to become one, or if Intel limits the number, that could reduce competition which could make it easier for those who do get authorized to collude/gouge.
    Reply
  • joeblowsmynose
    TJ Hooker said:
    Uh, why would Intel be honoring their warranty and replacing fake parts?

    Good question ... If the problem is created by shady retailers, and by Intel NOT honouring the warranty on fake parts and tells the consumer that the retailer sold him an illegal part, then the shade will get thrown back on the retailer, hurting their illegal business - a self correcting problem that would even save Intel a bit of money by not honouring a warranty on an illegal or fake product.

    So the question is why is Intel choosing to lose money by honouring warranty on fake products, when they could just not do that and help correct the problem of shady retailers? Cui bono?
    There seems to be something not quite logical about all this, and maybe that's why the complaint in the first place. On the surface it seems that there's nothing really wrong here, but I am not so sure ... this is Intel we are talking about after all.
    Reply
  • Groveling_Wyrm
    TJ Hooker said:
    Uh, why would Intel be honoring their warranty and replacing fake parts?

    Because Intel can't tell at first, when the get the malfunctioning parts, and replaces it, for a fast turn around, then come to find that they have received the bad/fake parts, when it is too late.
    Reply
  • bit_user
    GetSmart said:
    Parallel importers are not happy about having being left out of the warranty loop and deal with better(higher) prices from authorized sellers.
    I'm not sure if this is more a case about price-fixing or warranty coverage.

    Restricting warranty coverage to authorized resellers doesn't seem that unusual. You see that with a lot of products - even in the US. But, if it's used to support an unjustifiable price differential, that seems like the real issue.
    Reply