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Wright Comments on Intel Antitrust Case in Washington Post, BusinessWeek, CNET News

Professor Joshua Wright expressed doubt the New York attorney general's federal lawsuit against Intel will produce sufficient evidence of actual harm to consumers to convince judges of the case's merit.

In an interview, Wright explained, "Given the intuitive and easy to grasp nature of the consumer benefits of discounting contracts in the Intel case, I suspect that judges will be less likely to condemn these practices without real proof of actual consumer harm. I'm skeptical that AMD, (New York), or the (Federal Trade Commission) will be able to produce that here, " Wright said.

One of the primary accusations in the case is that Intel paid rebates to computer makers to illegally maintain monopoly and deprive AMD of obtaining business with PC manufacturers. The complaint also charges that Intel's actions deprived consumers of product choices and lower prices.

But Wright disagrees, saying, "Prices are falling, buyers are not complaining about Intel's loyalty discounts, and the lower prices produce obvious and immediate benefit for consumers."

Wright adds that PC makers "are able to play Intel and AMD off each other to get higher rebates. These rebates are ultimately passed on to consumers in the form of lower prices. That's a critical part of the equation here."

One charge hard to level at Intel: Raising prices, CNET News, November 6, 2009. By Brooke Crothers.

Excerpt:

"One of the most recent examples of steep downward PC price pressure is Netbooks, which have been a hit with many consumers because of their low cost, typically around $350. Intel, along with PC makers such as Asus, Acer, and Hewlett-Packard, created the Netbook market, whose rise forced AMD to counter with a technology platform for low-cost thin laptops that are, ironically, more expensive than Netbooks. 'Ultrathins'--a market that Intel also participates in and is sometimes referred to as CULV, or consumer ultra low voltage laptops--typically start at $500 and range up to about $900.

Wright adds that U.S. law differs from the European Union--where Intel was fined $1.45 billion earlier this year--in the area of monopolies and harm to competition. 'The main difference between U.S. and EU law is that when it comes to monopolization cases, the U.S. approach is inherently skeptical about condemning conduct which benefits consumers to avoid speculative future harms. The EU approach condemns most any non-standard discounting contract from large firms on the grounds that they are likely to harm competition,' he said."

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N.Y. files antitrust lawsuit against Intel, The Washington Post, November 5, 2009. By Tomoeh Murakami Tse and Cecilia Kang.

Excerpt:

"In May, the European Commission fined the company $1.45 billion for alleged antitrust violations. Intel is appealing. Regulators in Japan found four years ago that the chipmaker had violated the country's antitrust laws, as did South Korean regulators last year. AMD is also suing Intel in a four-year-old case set to go to trial in Delaware in March.

"In the United States, the FTC has been investigating Intel since mid-2008 but has yet to take action. Observers said Wednesday that that could change.

"'The FTC is likely to file a suit in a couple of weeks,' said Joshua Wright, a law professor at George Mason University who was an antitrust attorney in the FTC's bureau of competition until last year. 'The New York suit puts pressure on the FTC not to get pegged as a regulator asleep behind the wheel.'

"An FTC spokesman said the investigation is continuing but declined to comment further."

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Does Intel Hold the Edge in Antitrust Cases? BusinessWeek, November 10, 2009. By Arik Hesseldahl.

Excerpt:

"Prosecutors may thus struggle to persuade the court that consumers haven't benefited from the competition between Intel and AMD, Wright says. In that case, they'll need to focus on the potential threat in the future, an argument that holds more water in foreign courts than in the U.S., he adds. 'U.S. courts have a built-in skepticism to the argument that a market that benefits consumers now—a bird in the hand—is outweighed by the potential loss of that benefit in the future—the bird in the bush,' Wright says. Indeed, Intel has lost antitrust cases brought against it in Japan, South Korea, and the European Union.

"Far from being victims of alleged malfeasance, PC makers used the rivalry between Intel and AMD to their advantage, Wright adds. 'What strikes me about this situation is the relatively small number of buyers who have become very proficient at playing off Intel and AMD against each other,' he says. 'The mere threat or implication that they might buy more AMD chips seems to prod Intel into doing what they want.' In instances cited in Cuomo's complaint, Dell executives prodded Intel for higher payments in order to keep the PC maker from buying AMD chips. Dell has declined to comment on the issue, calling it 'an Intel matter.'"

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