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September 1, 2005

Intel denies everything in AMD antitrust case

Intel Corp has filed its response to the antitrust lawsuit its competitor, Advanced Micro Devices Inc, filed against it in late June.

By CBR Staff Writer

The company denied everything, including the existence of a separate market for x86 processors, and while its answer does not offer much in the way of factual defenses it does contain no less than 27 legal defenses.

Intel refuted AMD’s claims that its small share of the chip market can be attributed to Intel using a Mafia-like campaign of threats, intimidation and retribution to secure exclusive or near-exclusive distribution at AMD’s expense.

The evidence will show that every failure and setback for which AMD today seeks to blame Intel is actually a direct result of AMD’s own actions or inactions Intel says in its response, filed in the Delaware District Court yesterday.

Specifically, Intel claims that its lock on PC makers is due to its chips’ superior performance and pricing, rather than any anticompetitive actions, and that many of AMD’s problems have been caused by a failure to build out manufacturing capacity.

At best, AMD can only allege a pattern of price reductions and incentives offered by Intel to its customers which, if accepted, contribute to an overall lower price for Intel products than would be the case without such incentives, Intel says.

AMD claims that Intel sustains a monopoly that allows it to charge higher prices, but that it does so by lowering prices, the Intel answer adds. This allegation is inherently contradictory.

While that seems like common sense on the face of it, it will probably take the economists that will likely be called as expert witnesses at trial to untangle the underlying numbers.

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If AMD wants to prove that Intel’s actions cause damage to PC consumers in the form of higher prices, it will have to show that prices overall would be lower if Intel did not use its market muscle to offer incentives and discounts.

When it comes to challenging each of AMD’s factual claims, many of which use direct or anecdotal quotes from PC makers and distributors to show a pattern of anticompetitive behavior, Intel has less to offer.

AMD claims that many major OEMs, including Dell, HP, IBM, Sony, Fujitsu, NEC, Toshiba, Hitachi and Gateway have either refused to deal with AMD or have dramatically limited or reduced the number of AMD chips they buy, due to fear of Intel retaliation.

On most of these claims, Intel merely says that it doesn’t know what the states of mind of these third parties were when they made the decisions AMD claims were out of fear of Intel, and denies the claims on those grounds.

The answer does address a few claims in more detail, however, such as the claim that former Intel CEO Craig Barrett made a trip to Acer’s headquarters in Taiwan to talk of severe consequences if Acer got involved in an AMD marketing event.

Intel said that Acer’s CEO Stan Shih has publicly stated that his conversation with Mr Barrett, contrary to AMD’s allegations, focused entirely on industry development and technology trends.

The company also points to UK retailer Dixons, which has publicly denied AMD’s claims relating to its relationship with Intel, and to some companies that have, contrary to AMD’s claims, promoted AMD-based machines.

The complaint also contains the expected amount of oneupmanship. Whereas AMD scorned Intel for lagging on 64-bit processors, Intel takes a pop at AMD for trailing in notebook innovation.

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