Evidence may have been overlooked in EU Intel antitrust case

A meeting between the European Commission and a Dell executive in which it was reportedly revealed that the PC OEM viewed the performance of AMD as "very poor" may have been missed in the recently concluded EU Intel antitrust investigation.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 8/10/2009

Intel may have reason to further argue against the antitrust findings and record $1.45 billion (1.06 billion Euro) fine levied against it by the European Commission (EC) in May.

In the EC ruling, the commission said that the chip maker had been violating antitrust rules and abusing its dominant x86 CPU market position at cost to its rivals, including AMD. The EC further said it came to the $1.45 billion fine amount based on the duration of the infringement established in its decision (five years and three months) and based on Intel's total sales in the European Union (EU) during the period.

In a Wall Street Journal (WSJ) report, the newspaper cited a yet to be publicly released report in which the EU ombudsman, P Nikiforos Diamandouros, claimed the commission committed "maladministration" by not recording in the case file a formal account of an August 2006 meeting between commission investigators and a senior Dell executive question in the long-running antitrust case. According to the WSJ, Diamandouros' report stated that the executive is believed to have told investigators that Dell viewed the performance of AMD as "very poor."

Also see "Intel's apparent predicament: Guilty before proven innocent" for commentary on this news.

To be true, 2006 was the first year Dell began working with AMD processors.  It was well known at the time that Dell had concerns about AMD's quality, performance, and manufacturing capacity prior to establishing its relationship with the Intel rival.

Still, such a statement by a major PC OEM like Dell could be considered evidence that Intel's chips were purchased not because of illegal antitrust practices -- such as hidden rebates and direct payments to computer manufactures to halt or delay the launch of specific products containing competitors’ x86 CPUs and to limit the sales channels available to these products, as the EC stated in its findings -- but because of quality performance and technical merit.

Intel has argued against the EC decision claiming that it is "wrong and ignores the reality of a highly competitive microprocessor marketplace – characterized by constant innovation, improved product performance and lower prices." Beyond damage to Intel's reputation, the EC ruling and $1.45 billion fine forced a Q2 loss at the company.  As of 11:50am eastern, Intel had not issued a statement on the WSJ report.

How Ombudsman Diamandouros' report will impact the EC antitrust ruling and fine is unclear. The WSJ noted that as there is no record of the discussion, it is not clear what the Dell executive specifically said. It should also be noted that while the EU ombudsman is one of a short series of independent checks on the commission, the official has no authority to change the outcome of an EC ruling.

Diamandouros has been the EU ombudsman since 2003. Prior to his current position, the Athens native was the first National Ombudsman of Greece.