Competition Policy in a Global Market
AMD v. INTEL
Presented by
Lucy Cradduck LLB, LLM (TechLaw), Solicitor
QLS European Perspectives on Law Conference
Paris, 17-19 October, 2007
Session 8
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“It is not enough to succeed.
Others must fail.”
Vidal, Gore US author & dramatist (1925 - )
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Competition Policy
 Focus on protecting competition not competitors
 Successful competition can result in damage to
competitors
 ‘Aggressive’ competitive behaviour may be
acceptable but anticompetitive behaviour is
prohibited or regulated
 Underlying rationale of policies vary –
 i.e. economics plays a much greater role in
competition policy in the US than in Australia
 Prohibited conduct similar not same
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What is all the fuss about?
AMD
v
INTEL
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Presentation Overview
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A little bit of history
Issues
Relevant Laws
Complaints
Current US action
The Australian perspective
Presentation context
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A little bit of history
Intel Corporation (‘Intel’)
– Founded in 1968
– Initial focus on development of ‘integrated circuit
memory device’ and ‘dynamic random access memory’
– First microprocessor was the 4004
– 1970’s: began working collaboratively with clients
– 1980’s: IBM selection of Intel chip architecture for its
PCs – focus now on PC market
– 2003 - 2005 increased competition from AMD
– 2006: collaboration with Skype
– 90% of chip revenue globally (allegedly)
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A little bit of history, cont
Advanced Micro Devices, Inc (‘AMD’)
– Founded in 1969
– 1970: introduces first proprietary device: Am2501 logic
counter
– Initial focus on development of ‘integrated circuit
memory device’ and ‘dynamic random access memory’
– 1982: agrees to be secondary source for IBM re Intel’s
x86 chips under a Technology Sharing Agreement (‘TSA’)
– 1999: first AMD x86 chip with Intel – the Athlon
microprocessor
– 2003: introduced Opteron microprocessor for servers
– April 2005: AMD named “Processor Company of 2005”
– 10% of chip revenue globally (allegedly)
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A little bit of history, cont
A global market -
NB – figures refer to number of PCs sold not revenue
Source – Advanced Micro Devices, Inc and Anor v Intel Corporation and Anor Civil
Action No.05-441-JJF, United States District Court for the District of Delaware,
Complaint filed 27 June 2005 - paragraph 25
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A little bit of history, cont
Previous ‘disagreements’ between AMD and Intel Re TSA
 1982: dispute re Intel’s failure to share information re 80286 chip
 1984: dispute re 80386 chip
 1987: arbitration re TSA
 1992 – arbitration award of $10 mil to AMD
 1994 – Californian Supreme Court upheld award
 Re Intel’s 287 Microcode
 1990:
 1992:
 1993:
 1994:
Intel alleged copyright infringement by AMD’s 80C287 code
jury verdict in Intel favour
new trial ordered (AMD application)
jury verdict in AMD favour
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A little bit of history, cont
 Antitrust allegations by AMD against Intel
 1991: AMD filed complaint
 Re Intel’s 386 Microcode
 1991: Intel alleged copyright infringement by AMD’s 80C386 code
 Non-issue subsequent to AMD’s success in 287 Microcode litigation
 Intel Business Interference litigation
 1992: AMD alleged tortious interference with economic advantage –
violation of Unfair Comp. Act (Cal.)
 Action stayed
 1995 – global ‘settlement’ of claims regarding conduct occurring
before 6 January, 1995
 1997 – trademark infringement alleged by Intel against AMD –
settled
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A little bit of history, cont
Principles for Responsible Business
“Intel encourages competition, which benefits
consumers by prohibiting unreasonable
restraints on trade. Intel competes vigorously
while at the same time adhering to both the
letter and spirit of antitrust laws.”
http://www.intel.com/intel/finance/prin_resp_bus.htm (viewed 05/09/2007)
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A little bit of history, cont
Intel Code of Conduct May 2, 2007
“To adhere to antitrust laws, we must not:
– Communicate with any competitor relating to price,
any term that affects pricing, or production levels,
– Divide or allocate markets or customers,
– Agree with a competitor to boycott another
business, or
– Put inappropriate conditions on purchases or sales.”
http://www.intel.com/intel/finance/docs/code-of-conduct.pdf (viewed 05/09/2007)
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A little bit of history, cont
 Current concerns regarding “rebate
policy” and corporate behaviour
 Intel is alleged to be a “monopolist” in
the “global duopoly” of microprocessor
manufacturing
Albert A. Foer, The American Antitrust Institute
letter to US Federal Trade Commission 29 August,
2007 http://breakfree.amd.com/en-us/assets/AAI%20FTC%20Letter%208.30.07.pdf
(viewed 4/9/2007)
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Issues
How is conduct regulated when –
 Occurs across multiple jurisdictions
 Competition laws and policies are similar
but not the same
 No one regulator or regulatory system to
monitor, investigate and punish
 Availability and scope of private penalties
varies
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Relevant laws
European Union
Article 82 EC Treaty
Any abuse … of a dominant position within the common
market or in a substantial part of it shall be prohibited … in
so far as it may affect trade between Member States. Such
abuse may, …consist in:
(a) …imposing unfair …prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the
prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions…thereby
placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance…of …
obligations not connected with the subject of such contracts.
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Relevant laws, cont
South Korea
Monopoly Regulation and Fair Trade Act
Article 3.2 – prohibits a “market-dominating
enterprise” from –
•
•
•
•
•
Price maintenance
Controlling the sale of service
Interfering with the business activities of others
Impeding the participation of new competitors
Acting to exclude competitors or harm the interests of
consumers
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Relevant laws, cont
United States
Sherman Antitrust Act 1890 prohibits Sec. 1 – “Every contract, combination …or conspiracy, in restraint
of trade or commerce among the several States, or with foreign
nations…”
Sec. 2 – Monopolizing or attempting to monopolize “…trade or
commerce among the several states, or with foreign nations…”
Clayton Act Antitrust Act 1914
Sec. 4 – a successful plaintiff may recover “…threefold the
damages by him sustained, and the cost of suit, including a
reasonable attorney's fee…”
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Relevant laws, cont
Japan
Antimonopoly Act
Article 3 – “No entrepreneur shall effect private
monopolization or unreasonable restraint of trade”
Article 6 – “No entrepreneur shall enter into an
international agreement or an international contract
which contains such matters as fall under
unreasonable restraint of trade or unfair trade
practices.”
Unofficial English translation - http://www.jftc.go.jp/e-page/legislation/ama/amended_ama.pdf (accessed 14/9/2007)
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Complaints
 European Union
 South Korea
 United States
 Japan
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Complaints, cont
European Union
EC Statement of Objections - EC Press Release
MEMO/07/314 Brussels, 27 July 2007
 2001: EC commenced investigation (includes German
action)
 June 2004: raids across Europe by various
competition regulators
 12 July 2005: raids by EC
 27 July 2007: Statement of Objections served on Intel
 10 weeks for Intel to respond (i.e. by 5 October 2007)
NB Response not available at time of provision of powerpoint slides to QLS (28/9/7)
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Complaints, cont
South Korea
South Korean Fair Trade Commission
– Violations of antitrust regulations
– 11 Sept. 2007 - Statement of Objections served –
• "the results [of the investigation] are about suspicions over
Intel's abuse of its dominant market power in Korea.“ KFTC
official Kim Sung Man
– Allegations to be reviewed by the full Fair Trade
Commission
• Adverse decision subject to Court review
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Complaints, cont
United States
Advanced Micro Devices, Inc and Anor v Intel Corporation
and Anor Civil Action No.05-441-JJF, United States District
Court for the District of Delaware
– Commenced June 2005
– Allegations that Intel and Intel KK (Japan) engage in conduct
violating the Sherman Act (by illegally abusing its monopoly position
to exclude and limit competition) and the California Business and
Professions Code by• Discriminatory discounts
• Rebates
• Interfering with prospective business advantages of AMD
– Subpoenas issued for third party discovery – includes Microsoft,
Skype
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Complaints, cont
Japan
Japan Fair Trade Commission recommendation decision
to Intel Kabushiki Kaisha (8 March 2005)
– IKK “made the five major Japanese [operating equipment
manufacturers] refrain from adopting competitors’ CPUs …by
making commitments to provide …rebates and/or…[market
development funds]…”
– Breach of Article 3 Antimonopoly Act
AMD Japanese Subsidiary v Intel Kabushiki Kaisha (2
actions) – Seeking civil damages arising from the breaches of the
Antimonopoly Act
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Complaints, cont
A comparison
Start Jurisdiction
Instigator
1984
USA
AMD
Various
1995 Settlement
2001
EU
EC
(2000 - AMD
complaint)
Unfair business
practices
27/7/7 – SO sent Ongoing
8/4/4
Japan
JFTC
Abusive conduct
re rebates and
MDF
8/3/5 – decision
became order 31/3/5
- abuse of monopoly
Abuses of
dominant market
power
9/2/6 – raids by FTC
12/9/7 – statement of
objections served
2005
South Korea
SKFTC
Conduct
Status
power
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Complaints, cont
Start
Jurisdiction
27/6/5 USA
2005
Instigator
AMD
USA – US
78 class
District Courts
actions
and State Courts
30/6/5 Japan
AMD
Conduct
Status
Discounts,
rebates,
interference
Ongoing – trial 2009
Thursday, April 27 at
9:30 a.m.
Rebates
Consolidated to either
MLP Delaware or
California - ongoing
Breaches Anti-
16/12/5 – Order made
JFTC to hand over
docs re its
investigations
monopoly Act
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Current US action
Issues
 Claims relating to conduct outside the USA
struck out
 Discovery permitted re struck out claims
 Action also hampered by Intel’s ‘archiving’
policy and ‘preservation’ system
 Cost
• 36+ Discovery subpoenas and 42+ Class
subpoenas
– 11 subpoenas just to Intel
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Current US action, cont
 A ‘global’ market?
• EU – internal market but with extraterritorial
application if conduct affects internal competition
• USA – market – not defined but not limited other
than by FTAIA but subject matter jurisdiction
issues can arise
• Sth Korea - internal market but with
extraterritorial application if conduct affects
internal competition
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The Australian perspective
Australia
Trade Practices Act 1974
S. 46(1) – “A corporation that has a substantial
degree of power in a market shall not take
advantage of that power in that or any other
market for the purpose of:
(a)Eliminating or substantially damaging a competitor…
(b)Preventing the entry of a person into that or any other market;
(c) Deterring or preventing a person from engaging in competitive
conduct in that or any other market…”
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The future
How do we get there?
 Co-operation of enforcement agencies
• Detection and prosecution of cartels
 Harmonisation of laws
• “One law”?
• International treaties - trade
• Bilateral agreements
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The future, cont
• Issues impacting on co-operation
– Prohibited conduct similar but not the
same
• Issues impacting on harmonization
– (ab)use of trade power by more developed
nations to force agreement
– No distinction between hard core cartel
behaviours and beneficial agreements
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The future, cont
• Other
– Conflict between copyright laws (TPMs) and
competition laws
• Absolute and State protected monopolies will impact on
the effectiveness of competition laws
– Foreshadowed changes to EC Treaty – removal of
words “free and unfettered competition” from
Objects
– USA Antitrust modernization commission report
– AMD’s current alliances
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Presentation context
 PhD Candidate: Information Security Institute, QUT,
Brisbane, Australia
 Thesis title: “Technological Protection Measures: A
Cartel for Anti-competitive practices”
 Research context: How can “…competition law rectify
or ameliorate the real or potential excesses of the
enforcement of digital rights management schemes?”
 Research is part of ARC Discovery Grant on “The use of
information and cryptographic technology to
restrict competition” - Chief Investigators are Prof. Bill
Caelli, Prof. Stephen Corones and Dr. Adrian McCullagh
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Merci!
Comments, thoughts or suggestions welcome.
Please email to
l.cradduck@student.qut.edu.au
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