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To: JCB01 who wrote (260197)	5/14/2009 4:52:48 PM
From: Tenchusatsu	Read Replies (1) \| Respond to of 275872

Good post, JCB. I'll just comment on the last part: > Anyway, that's my guess. Intel wrote contracts that met the letter of the law, but violated the spirit. That all depends on what your definition of the "spirit of the law" is. If it means preserving the Intel-AMD duopoly at all costs, which is what the EU seems to be intent upon, then yeah, Intel is guilty of not helping AMD to survive and make a self-sustainable profit. Tenchusatsu

To: JCB01 who wrote (260197)	5/14/2009 6:28:15 PM
From: pgerassi	Respond to of 275872

Dear JCB01: Your example is a first dollar rebate. Those are illegal, especially for monopolies and near monopolies. So Intel's contracts violated both the law and its spirit. They also tailored each discount schedule to each company and that is against the law as well. Minor differences are allowed as long as each is economically justified. The price breaks themselves and their enable points are economically justified because additional sales have lower costs to administer. Making a PO for 100 units is about the same as making it for one. You might do some more checking and vetting with the larger unit order because anything wrong with it is a larger dollar hit, but not 100 times more. Thus the discount schedule itself is economically justified by that method. Notice that it doesn't change whether a large or a small company makes out the PO. Some minor savings would be, if the order was made and submitted electronically in a compatible format to the seller's systems. But even that shouldn't change the break points very much (a slight decrease across the board). Thus seeing the discount breaks (volume points) change a lot on a company by company basis is enough to say that the contracts are presumed illegal. Its very hard to disguise that. And even harder to make any legal economic case for that. Most good regulators don't look at what a contract says as much as what happens. In fact European Competition laws says that anything that tends to reduce competition is illegal. There are known things excepted from that test (patents or copyrights being some of them for example), but in general, it applies. Believe it or not, many other country's competition laws have the same principal written in. Its obvious Intel hates to lose this flexibility in the break points, but none of their justifications are supported by the laws in question. And if regulators here in the US would just apply the laws already on the books, Intel would be fined heavily and/or be broken up (consistent bad behaviour calls for this type of solution). Looking back on CPU prices by the time they hit retail, it can be easily shown that these rebates ended up with the consumer paying over $100 more per CPU during the period in question (and likely more than that going further back). Given that roughly more 800 million CPUs were sold during those 5 years, That translates to a hit to the consumer of $80 billion in extra costs. If they are fined even a fraction of that, they would be quickly drop into bankruptcy. Add in treble damages or other such booster, and you can see why they can't afford it playing all the way out. That is why they are in delay, delay and more delay mode. Pete