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:

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:

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.