John Paczkowski

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EC to Intel: How’s This for “Manifestly Disproportionate?”

ec_intc-150x150Intel’s criticism of the European Commission’s legal acumen clearly has not gone over well in Brussels. The EC today responded to Intel’s claims that the Commission’s antitrust ruling against the company was meted out in error by releasing the full text of its decision and a selection of email correspondence and internal memos that make it clear that Intel (INTC) probably should have kept its big mouth shut.

“There have been some suggestions that the decision was based on allegations and not facts,” said Jonathan Todd, a commission spokesman. “With the publication of this decision, you can see precisely the details of the facts and how Intel broke the law.”

Below, a few of those details:

From a series of 2006 Lenovo e-mails:
“As you know I have been negotiating a special deal with Intel. The net is that Intel has made us a very attractive offer that we will end up taking. Our part of this deal is that we will award all business of shipments for the rest of this calendar year to Intel. In exchange, Intel will give us a special deal for both [geographical area] and [geographical area]. The deal is worth millions of dollars.”

“[two Lenovo executives] had a dinner with [an Intel executive] tonight (…). […] When we asked Intel what level of support we will get on NB [notebook] in next quarter, [he] told us (…) the deal is base[d] [sic] on our assumption to not launch AMD NB [notebook] platform. (…) Intel deal will not allow us to launch AMD.”

From a 2002 HP e-mail concerning the company’s negotiation of a rebate agreement with Intel:
“PLEASE DO NOT… communicate to the regions, your team members or AMD that we are constrained to 5 percent AMD by pursuing the Intel agreement.”

From a 2004 HP e-mail:
“You can NOT use the commercial AMD line in the channel in any country, it must be done direct. “If you do and we get caught (and we will) the Intel moneys (each month) is gone (they would terminate the deal). The risk is too high.”

From a 2004 Dell e-mail:
“[Intel senior executives] are prepared for [all-out war] if Dell joins the AMD exodus. We get ZERO MCP for at least one quarter while Intel ‘investigates the details’ (…) We’ll also have to bite and scratch to even hold 50%, including a commitment to NOT ship in Corporate. If we go in Opti [Optiplex corporate desktop line], they cut it to <20% and use the added MCP to compete against us" and "It looks 100% certain that Intel will take MCP to ZERO for at least one quarter while they 'review all of the numbers and implications.' (...) Appears likely that Intel would take MCP to <25% of current levels UNLESS we agree up front not to ship into [Product line]. If we do that, we're in 'détente' mode and can keep MPC [sic] at 50%. However, we don't meet [AMD Senior Executive]'s T&Cs [Terms and Conditions]. So, I would plan on MCP at <20% levels if we execute AMD across [Product line]and [Product line] as AMD wants."

Sounds pretty damning, no? Well, Intel doesn’t think so. In a hastily issued response, the company dismissed the EC’s release of the documents saying, “there’s nothing new here.”

“This Decision reflects the underlying bias we have come to expect from the case team that ran this investigation,” Intel said. “The Commission relied heavily on speculation found in e-mails from lower level employees that did not participate in the negotiation of the relevant agreements. At the same time, they ignored or minimized hard evidence of what actually happened, including highly authoritative documents, written declarations and testimony given under oath by senior individuals who negotiated the transactions at issue.”