Legal Aspects of

Business
Competition/Antitrust Law

This assignment discusses the Competition and Antitrust

Laws in select geographies and discusses it with reference
to various lawsuits filed against Intel

Submitted By:
Abhishek Singh
10P004

August 29, 2010

Table of Contents
Anti Trust/Competition Law..................................................................................................................2
The Law.............................................................................................................................................2
USA................................................................................................................................................2
European Union.............................................................................................................................2
India...............................................................................................................................................2
Case: Antitrust suits against Intel......................................................................................................3
AMD vs. Intel.................................................................................................................................3
FTC vs. Intel....................................................................................................................................3
Analysis of Cases................................................................................................................................3
Anti Trust/Competition Law

The Law
Anti-trust or competition laws in most countries ensure a competitive market situation and
prohibit anti-competitive conduct by companies. Although not very strong in most
developing nations, competition laws in developed countries, especially United States and
European Union are very influential.

In general, a competition law comprises of the following:

 Prohibition of practices restricting competition

 Restriction on formation of cartels
 Banning anti-competitive practices, especially by a market leader.
 Prohibition or correction of mergers, acquisitions and joint ventures which pose a
threat to free trade.

USA
In USA, competition law is referred to as Anti-trust law. This law is applied by government
bodies known as competition regulators and private litigants. The antitrust law in the
country aims to prevent monopolization, carte formation and price fixing. The law can be
enforced by the federal government via Antitrust Division of the United States Department
of Justice and the Federal Trade Commission. In addition to this, a state attorney general or
a private party can also file a suit.

European Union
In European Union, apart from providing a fair market situation, the competition law also
aims at providing a free market inside the entire EU. The law covers the following:

 Control on cartels or collusion

 Prevention of monopolies
 Control of mergers and acquisitions
 Control on state aid

In this case, the last point is unique to the European Union and ensures that individual
countries do not promote their national companies.

India
In India, although not very strong, a competition law has existed since 1970. The
Monopolies & Restrictive Trade Practices Act, 1969 came into effect on 1 st June 1970.
Competition law was reviewed by a government appointed committee and a new
competition law was formed in 2002, which came into effect from 13 th January 2003. To
ensure the enforcement, the government of India established Competition Commission of
India (CCI) in October, 2003. The objectives of the commission include the following:
  Prohibition of anti-competitive agreements
 Restriction on monopoly
 Restriction on agreements to fix price, allocate markets, limit production and supply,
exclusive supply, refusal to deal, etc.
 Prevention of abuse of dominance

Case: Antitrust suits against Intel

Among the numerous lawsuits Intel has been involved in, a few pertain to competition laws
of various geographies. Some important ones are summarised below.

AMD vs. Intel12

In 1991, Advanced Micro Devices (AMD) filed an antitrust lawsuit against Intel and claimed
that Intel was abusing its power of being the leading manufacturer of X86 processors and
was trying to gain and maintain a monopoly. In the judgement to this case, Intel was asked
to pay USD 10 million to AMD.

Further, in June 2005, AMD filed a complaint against Intel in a US district court, alleging that
Intel was involved in unfair competition by tying up with Japanese PC manufacturers who
would limit or eliminate purchases from other microprocessor manufacturers in exchange of
rebate from Intel. The trial was initially scheduled to being in April 2009 and was later
postponed to start from February 2010. However Intel agreed to pay AMD a sum of USD
1.25 billion in November 2009 to settle all legal disputes between the two.

In May 2009, European Commission also slapped a fine of EUR 1.06 billion on Intel,
following complaints by AMD in 2000, 2003 and 2006. Intel has appealed against this ruling
and a decision on the case is pending.

Andrew Cuomo vs. Intel3

Andrew Cuomo, the attorney general of the state of New York, filed a suit. His complaint added
nothing significant to the issue, but provided some significant example of rebates given by Intel to
PC manufacturers such as Dell. According to Cuomo, Intel paid USD 6 billion in rebate to Dell during
the period 2002 to 2007.

FTC vs. Intel45

Federal Trade Commission, US had sued Intel in December 2009, accusing it of following
anti-competitive practices and trying to build a monopoly. According to FTC, Intel used
threats, bundled pricing and other methods to illegally curb competition.

1
http://en.wikipedia.org/wiki/Intel_Corporation#Lawsuits
2
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/09/745
3
http://www.economist.com/blogs/newsbook/2010/07/intels_antitrust_cases
4
http://news.cnet.com/8301-13578_3-20012610-38.html
5
http://arstechnica.com/tech-policy/news/2010/08/intel-tentatively-settles-ftc-antitrust-suit.ars
FTC and Intel reached a settlement in August 2010. According to the settlement, Intel is
prohibited from indulging in anti-competition practices in the sale of Central Processing
Units (CPUs) and Graphic Processing Units (GPUs).

Apart from these cases Intel has faced antitrust lawsuits in Japan and South Korea as well.

Analysis of Cases
Competition laws in most countries are still in nascent form and not enforceable. However,
the above cases indicate the severity of issues as indicated by the amount of fines imposed
on Intel. Further, such charges are hard to prove in all the cases, and the laws might not be
enforceable in non capitalist economies, such as India and other developing nations.

In case of Intel and AMD, the judgement issued is a landmark as it pertains to an industry in
which abuse of market dominance is not harming consumers, which is evident by the falling
prices of computer microprocessors in the recent past. Even then, the illegal practices are
harmful for the competition and consumers might be suffering due to disadvantageous
situations for competitors as it curbs innovation in the industry.

Intel, in the above mentioned cases, opted for settlement even before the trials began.
Probably, an antitrust trial might have been foreseen as a source of negative publicity by
Intel. Whatever the case maybe, Intel has been forced to step back from its monopolistic
behaviour, due to stringent competition laws in US and EU. Still, the settlement took a long
time (AMD filed its first complaint in 2000, after 1991 lawsuit) which could be detrimental
for the industry in the due course.