What the EU Doesn’t Get: Harming Competitors is Called Competition (and shouldn’t be illegal)

by on May 13, 2009 · 11 comments

The European Commission is a loose cannon when it comes to antitrust and competition law. It’s record $1.45 billion fine is emblematic of what the Commission just doesn’t get:  there’s a difference, a difference that matters, between consumer and competitor harm.

EU Commissioner for Competition Neelie Kroes said otherwise:  Intel had “used illegal anticompetitive practices to exclude its only competitor and reduce consumers’ choice — and the whole story is about consumers.”

No, the whole story is not about consumers, Ms. Kroes. It’s clear that the only harm that Intel has carried out is on it’s main rival AMD–and that’s called competition. Over at the ACT blog, my colleague Mark Blafkin has a good post that details the lack of consumer harm.

Here’s the main point–competition shouldn’t be illegal. But according to EU law, companies with a dominant position in the market have  a legal duty to not eliminate competition, while in the U.S. only monopoly power imparts this duty. U.S. culture, reflected (partially) in antitrust law, holds that the competitive process of driving other companies out of business makes an economy efficient and innovative.

  • http://www.skipoliva.com Skip Oliva

    Braden, you had a nice post until the end. Stop pretending like the US somehow has its antitrust act together. This country's antitrust regime is every bit as psychotic and evil as the Europeans — they've simply done a better job of placating squishy free-marketeers into thinking it's better. Your too smart to fall into that trap.

  • http://srynas.blogspot.com/ Steve R.

    Braden, I think you have missed the point. The issue is whether Intel did or did not engage in a deceptive business practice. Personally, I don't know if Intel did or did not engage in any deceptive business practice.

    According to CNET the EU is asserting: “The first was that it gave wholly or partially hidden rebates to computer manufacturers on the condition that they buy all or almost all of their x86 CPUs from Intel. This illegal practice also included Intel's making direct payments to a major retailer so that it would stock only computers with Intel x86 CPUs.”

    “The second illegal practice was that Intel made direct payments to computer manufacturers to halt or delay the launch of specific products containing competitors' x86 CPUs and to limit the sales channels available to these products.”

    Needless to say, the line of when a rebate is a valid business practice versus a deceptive business practice is slippery and hard to define. So before declaring the EU a “loose cannon” we need to have an understanding of what Intel was actually doing. I have no knowledge of whether Intel was actually “guilty” as charged or whether Intel is simply the victim of an anti-American witch hunt by the EU.

    Now if it had been Microsoft, GUILTY as charged!

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  • http://srynas.blogspot.com/ Steve R.

    Ed Felten has this post: “European Antitrust Fines Against Intel: Possibly Justified” I don't know if the EUs decision was valid or incorrect, but before that assessment is made we need to know whether Intel did or did not engage in deceptive business practices.

  • http://srynas.blogspot.com/ Steve R.

    Ed Felten has this post: “European Antitrust Fines Against Intel: Possibly Justified” I don't know if the EUs decision was valid or incorrect, but before that assessment is made we need to know whether Intel did or did not engage in deceptive business practices.

  • http://srynas.blogspot.com/ Steve R.

    Ed Felten has this post: “European Antitrust Fines Against Intel: Possibly Justified” I don't know if the EUs decision was valid or incorrect, but before that assessment is made we need to know whether Intel did or did not engage in deceptive business practices.

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