Japan's Trade Office Warns Intel About Processor Sales

Japan's trade watchdog, the Fair Trade Commission (JFTC), suspects Intel's Japanese unit broke local antitrust regulations by offering incentives to major PC makers to limit their usage of processors from Intel's rivals, it said Tuesday.

"Intel is engaging in actions to keep CPUs made by competing companies from being used," the JFTC said in a statement. "[These actions] are substantially limiting the CPU sales sector for domestic personal computer makers."

The JFTC said that Intel's market share grew from 76 percent to 89 percent between 2002 and 2003 as a result of the practices.

The commission has been investigating Intel since last April and published its findings in a report today. The recommendation outlines a number of steps that the commission wants Intel to take.

Intel has until March 18 to accept the JFTC's recommendations or risk further legal proceedings. The JFTC did not issue a monetary fine against Intel.

Intel Says It Played Fair

Intel continues to believe its business practices are both fair and lawful, it said in a statement issued shortly after the JFTC made public its finding. The Santa Clara, California, company said it is evaluating the JFTC charges and recommendations before deciding on how to respond.

Intel also questioned whether the JFTC had found any evidence of harm to consumers during its investigation.

The company's largest competitor, Advanced Micro Devices, issued its own statement, applauding the JFTC and outlining the specifics of the JFTC decision.

According to AMD, the JFTC found that Intel negotiated proportions of non-Intel CPUs to be used within particular product families and used advertising support funds as a means for making Japanese notebook makers compliant.

Specifically, the JFTC found that one manufacturer was forced to agree to buy all of its CPUs from Intel, while another manufacturer was forced to keep its non-Intel purchases to 10 percent or less, AMD said.

The computer makers who were the subject of Intel's overtures have not been named by the JFTC; however, on the same day that the JFTC raided Intel's Japanese headquarters last year, it also visited the offices of Fujitsu, Sony, and Toshiba in connection with the investigation.

The JFTC recommendations include requiring Intel to notify its customers and inform its employees that it may no longer provide rebates and other funds to Japanese computer manufacturers on conditions that exclude competitors' CPUs, AMD said.

Questions in Europe

"We are cooperating with the Japanese authorities," said European Commission spokesperson Jonathan Todd on Tuesday. "We have a similar investigation into Intel's practices."

Intel is the subject of a separate ongoing inquiry by the European Commission, which last October asked four European Union countries why they appear to favor Intel processors in computers for public authorities.

In that case, the commission is trying to determine why Finland, France, the Netherlands, and Sweden issued tender requests to suppliers for computers containing Intel or equivalent microprocessors, or processors using a specific clock rate.

In 2004 the JFTC objected to certain provisions in license agreements between Microsoft and Japanese PC vendors, saying the agreements violated Japan's antimonopoly code.

Simon Taylor of IDG News Service contributed to this report.

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