Comment From Future Horizons On The EU Intel Case

"Whatever the legal or factual merits of the case, the fact that Intel has now been found guilty of abusing its dominant market position and of anti-competitive practices by the competition authorities in Japan, Korea and now the EU speaks volumes. The message is clear and frankly common sense. With size and market supremacy comes increased professional responsibility.

Whilst Intel obviously clearly believed it had behaved within the letter of the law, although equally clearly the EU, Japanese and Korean authorities felt otherwise, it ought to have been clear that it was sailing close to the boundaries of acceptability, if not the law. Intel broke the most fundamental laws of marketing; Rule 1 the customer is always right. Rule 2 if proved wrong, Rule 1 applies. Rule 3 never ignore what your customers are telling you, especially when your ‘customers’ are the world’s top competition authorities.

What might be an acceptable market practice with a sub-20 percent market share is almost certainly not acceptable at an 80 plus percent level. That means it is no longer acceptable to plead, “What we are doing is not illegal”. Market dominance requires firms to act, and be seen to be acting, well within the boundaries of the law, even if this seems to give away a potential competitive advantage.

In reality it will not, ironically many of the practices actually become irrelevant once a dominant market position has been reached. The firm’s very size and cost efficiency makes its market position secure, unless it really screws up, which takes time.

Far better for Intel to have headed this off at the pass - defending a case of this size and importance by sparring on points of law and legal interpretations was madness. It was also unnecessary. Intel is one of only a handful of chip firms that really understands the semiconductor business and the need to keep on innovating. And although it was sometimes beaten to the punch by AMD, its dominant market position was never ever in jeopardy.

To have lost this case against the European Commission shows a degree of arrogance that does not befit such a fine company as Intel. The forthcoming US anti-trust investigations and class-action lawsuits are now going to be an awful lot tougher to defend."

Posted By: Malcolm Penn

Date: 14-May-2009

Category: Industry Related Comments