http://www.cbc.ca/technology/story/2009/11/04/intel-antitrust-cuomo.html

On Nov 4, 9:07 am, pw <stor...@tampabay.rr.com> wrote:

Competitors and analysts always assumed that Dell used to get the best
deal on chips from Intel. The latest suit against Intel finally
applies some dollar figures to that supposition, and cites other
unusual aspects of the companies’ relationship.

Dell would not comment Wednesday, and Intel would only issue a
generalized denial of charges in the antitrust suit brought by New
York Attorney General Andrew Cuomo. But the complaint says Dell
received approximately $6 billion in rebates from Intel between
February 2002 to January 2007–payments conditioned upon Dell using no
chips from rival Advanced Micro Devices Inc. Dell during that time
period went back and forth about whether to deviate from only buying
Intel chips, a policy it finally changed in 2006.

In a 2005 email quoted in the complaint–marked “confidential - DO NOT
FORWARD, Intel CEO Paul Otellini recounts what he calls “one of the
most emotional calls I have ever, ever had” with Michael Dell, the
computer maker’s founder.

In the email, Otellini says Dell began the call by saying “I am tired
of losing business,” and repeated it three to four times. “I said
nothing and waited,” Otellini said. Dell said he is “tired of being
behind for four years,” a reference to performance advantages of AMD
chips over Intel’s. “Dell is no longer seen as a thought leader,”
Otellini quoted Michael Dell as complaining, according to the
complaint.

But there was a lot to lose from changing the situation. The complaint
states that most of the rebates and other incentives were furnished to
Dell under an arrangement initially called MOAP, for “mother of all
programs,” and later dubbed MCP, which stood for “meet competition
payments.”

A 2003 Dell document, cited in the complaint, said “the intent of the
MCP program is to provide funding to Dell to combat the AMD threat in
the marketplace” since Dell is an Intel-only computer maker. “MCP has
been referred to as a ‘monogamy tax’ for Intel,” it adds.

Intel has long insisted that any payments it gave to computer makers
were simply a form of discounting, reflecting volume purchases from
customers. The goal, Intel has said, was to to meet competition as
Intel and AMD bid to supply chips for particular systems offered by
computer makers.

That contention is a fiction, the Cuomo complaint contends, describing
the situation at Dell. “In fact, the payments were decoupled from
particular products,” the document states. “Intel would determine the
total MCP percentage or amount for Dell for a given period, and only
then create paperwork at both Intel and Dell” to retroactively justify
its anticompetitive conduct.

The complaint alleges that Intel and Dell also established a “bid
bucket” program, under which Intel would provide Dell subsidies to
allow the company to sell server systems with Intel chip at lower
costs than machines powered by AMD chips. It also states that Dell had
another advantage over rivals; in the case of shortages, Intel would
take extra care Dell always got the chips it needed.

H-P’s situation was different. The Palo Alto, Calif., company had
already been using AMD chips, particularly in consumer PCs. Cuomo’s
complaint states that Intel was determined to limit sales of AMD-based
computers to corporate customers, a lucrative segment of the market.
Internal H-P emails cited in the complaint say the company became
worried that Intel could retaliate by reducing support for a chip line
called Itanium that was crucial for some H-P computers.

Confronted with Intel threats and eager to retain rebate payments, the
complaint alleges, H-P agreed to restrictions that include limiting
global sales of AMD-based desktop PCs to business to no more than 5%
of that business. One agreement between the companies, negotiated in
2004, contained incentives that H-P calculated was worth $182 million
to the company, the complaint states.

An H-P spokeswoman declined comment.

Chuck Mulloy, an Intel spokesman, said a protective order in AMD’s
private suit against Intel bars his company from providing evidence
that would counter the assertions contained in the emails and other
elements of the attorney general’s complaint.

Where Cuomo and his predecessors have jumped into many high-profile
antitrust cases before, there’s a particular New York connection in
this case. AMD decided to build a $4.2 billion chip plant in upstate
New York, a project now being pursued by a spinoff called
Globalfoundries Inc.

One question mark now is what might happen in Delaware, where both the
Cuomo and AMD complaints have been filed. Lawyers watching the case
say the state might try to join in with the AMD trial, set to begin in
March–a prospect that AMD might welcome and Intel would be likely to
oppose.

The presence of government lawyers sitting alongside of those for AMD
could make an impression on a jury. “All the sudden AMD is not
starting on their 20-yard line, they are starting on Intel’s 20 yard
line,” said David Balto, a former Federal Trade Commission official
who has been tracking the issues, usually agreeing with AMD.

On Nov 4, 1:13 pm, TheMikeness <northcott.mich...@gmail.com> wrote: