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FTC levels fines on Intel Corp. over trade

June 06,2008
The nation’s corporate watchdog has fined Intel Corporation, one of the world’s IT giants, 26 billion won ($25.4 million) for unfair trade practices, the Fair Trade Commission said in a release yesterday.

According to the FTC, Intel has been offering rebates to the nation’s major personal computer makers, on condition that they not purchase central processing units [CPUs] from Intel’s competitor, Advanced Micro Devices.

The FTC ordered Intel to scrap the practice.

The FTC said Intel had offered rebates to Samsung Electronics, the nation’s No. 1 PC maker, from the fourth quarter of 2002 to the second quarter of 2005 under the condition Samsung would not buy CPUs from AMD.

Intel gave Samsung about $31.9 million in rebates.

Intel had a similar deal with the nation’s No. 2 PC maker, Trigem Computer.

In return for rebates, Trigem bought at least 70 percent of its CPUs from Intel between the fourth quarter of 2004 and the second quarter of 2005.

Intel’s tab was $3.8 million.

After a three-year investigation, the FTC said that Intel had used unfair practices to maintain its market share in Korea.

Intel’s CPUs command a 91.3 percent market share in Korea to AMD’s 8.4 percent.

Globally, Intel has a 79.6 percent market share while AMD has 18.2 percent.

“With this correction, prices of CPUs will be lowered through fair competition,” said Jang Deuk-soo, a manager of the FTC.

“Consumers will also have more options when they purchase PCs,” Jang added.

As most computers and laptops come with Intel-based CPUs here, those who want to purchase AMD-based computers have to assemble their PCs themselves after purchasing AMD CPUs from retailers, which are located in Yongsan Electronics Market, the biggest tech retail outlet in the nation.

Meanwhile, Intel Korea said it is not pleased with the FTC’s decision.

“We were disappointed and will request a further review,” a spokesperson who wanted to remain unnamed said.

Intel was ordered to correct unfair trade practices in Japan in April 2005. The European Union and the United States are also investigating Intel for illegal rebates.


By Sung So-young Staff Reporter [so@joongang.co.kr]


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