| D: | What is this case about?
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| R: | Intel is illegally maintaining a monopoly in the x86 microprocessor market through threats, coercion and intimidation of its own customers. Our complaint contains 48 pages of details, naming 38 customers, and 7 separate kinds of illegality across three continents, that all adds up to one big antitrust violation.
Intel’s customers all face the same choice: accept conditions that exclude AMD or suffer discriminatory pricing and competitively crippling treatment.
Consumers ultimately pay for Intel’s conduct through inflated computer prices, stifled innovation and reduced choice. |
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| D: | How are Intel’s business practices harming consumers?
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| R: | History shows that competition leads to lower prices. And competition is best served when customers and consumers have a choice in a fair and open competitive market.
Intel has bullied its customers – particularly PC manufacturers - through financial threats and intimidation into entering exclusive deals, conditioning rebates on avoidance of AMD products and with threats of retaliation. These PC manufacturers now operate on small or negative margins, making them continually susceptible to Intel’s economic coercion; and Intel perpetuates its hold over them to the detriment of customers and consumers who are unable to select AMD products. Intel then exacerbates PC manufacturers’ financial weakness by charging monopoly prices.
This trickles down to consumers, who are forced to pay monopoly prices while at the same time they are denied the freedom to choose from a full range of products. |
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| D: | Intel’s business practices are also being investigated outside the U.S., right?
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| R: | Yes, Intel’s anticompetitive conduct is drawing scrutiny around the globe.
The Fair Trade Commission of Japan found Intel guilty of antitrust violations that harmed consumers, and still Intel refuses to face the facts or acknowledge wrongdoing. Additionally, the European Commission raided Intel’s offices across Europe - as well as the offices of a number of other companies manufacturing or selling computers - as part of its ongoing investigation into Intel for possible antitrust violations. South Korean antitrust authorities are also investigating the marketing and rebate practices of Intel. The commission has already conducted preliminary investigations into five South Korean PC makers supplied by Intel for the case and asked Intel to provide related documents. |
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| D: | Doesn’t your strong performance suggest that really there is no problem and thereby weaken your case?
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| R: | AMD was the first to ship dual core processors this spring, our market share in servers is growing, and our state-of-the-art 300mm fab came online in October 2005. In short, our reputation as an industry leader is now unquestioned, our business is strong and our competitor is playing catch-up.
But the simple fact is Intel's illegal business practices are limiting our ability to sell more processors. We know it, our customers certainly know it, the Japanese government knows it, and more governments around the world are taking notice. Were it not for Intel’s illegal actions, we are confident that customer demand for AMD products would be even greater. |
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| D: | Isn’t it legal for Intel to be a monopoly? If so, why are you suing them?
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| R: | It is not illegal to be a monopoly, but is illegal under the U.S. Sherman Act to abuse monopoly power and maintain a monopoly position through illegal means. Intel has unlawfully maintained its monopoly by coercion, threats and intimidation of its own customers to prevent them from doing business with AMD. |
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| D: | Does AMD even have the capacity to substantially increase its business?
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| R: | We can adjust our manufacturing mix within days to meet new demand for specific processors. We can accommodate new demand in the medium term through foundry suppliers, and in the long term, we can certainly add new capacity. But we can't grow if Intel illegally restricts OEMs from doing business with us through threats, coercion and intimidation.
In October 2005, we opened our 300mm Fab 36 in Dresden, Germany to enhance our manufacturing ability. We intend to make 90nm production shipments in the first quarter of 2006 and begin 65nm production by the end of 2006. |
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| D: | What are you asking for in damages and is there a possibility of a settlement?
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| R: | The most important thing we are asking for is that Intel cease its illegal activities and that a level competitive playing field be restored where the products can compete on the merits.
As a result of the economic harm caused by Intel’s conduct in the form of artificially constrained market share, increased costs of capital, lost profits and sales, and lost publicity and promotion, AMD has asked the court for injunctive relief prohibiting Intel from engaging in any further unlawful conduct; and an award for damages for wrongfully maintaining its monopoly, and for the lost profits and economic harm resulting from Intel’s illegal actions. This is to be determined during the course of the trial. Any decision to settle will be dependent upon Intel agreeing to cease their illegal activities. |
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| D: | How can I help?
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| R: | To share your thoughts about the litigation and the need for fair and open competition, please e-mail breakfree@amd.com. |
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