Good Stuff (Including Josh Wright) on Intel in Today’s WSJ

Thom Lambert —  14 May 2009

Our own Josh Wright is quoted in the lead article in today’s Wall Street Journal. Josh opines that the European Union’s record $1.45 billion fine against Intel for lowering its prices on granting “exclusionary” rebates on microprocessors means that FTC action against Intel is “much more likely than it was two weeks ago.” And what about our reinvigorated DOJ, Josh? Aren’t they going to want a piece of this action, lest they look like pansies next to those muscular South Koreans, Europeans, and FTC folk?

The Journal’s editorial page eloquently criticizes the Intel decision and bemoans DOJ’s decision to move in the European direction in regulating dominant firms. We’ve written some similar criticisms of the campaign against Intel. See, for example:

A quick note on Intel

Cuomo Goes After Intel (to Get AMD Plant for NY?)

Intel’s Loyalty Rebates: Why the Interventionists Are Wrong

NYT’s Freudian Slip

As you can see from these posts, I generally agree with the WSJ’s (and Geoff’s) take on Intel. I also agree that the Europeanization of American antitrust enforcement is a bad thing. I must confess, though, that I do see a silver lining in all this: It provides lots of fodder for us antitrust folks who believe that big does not necessarily mean bad and that consumers, not competitors, should be the focus of the law.

Thom Lambert

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I am a law professor at the University of Missouri Law School. I teach antitrust law, business organizations, and contracts. My scholarship focuses on regulatory theory, with a particular emphasis on antitrust.

3 responses to Good Stuff (Including Josh Wright) on Intel in Today’s WSJ

  1. 
    Thom Lambert 15 May 2009 at 9:40 am

    Geoff–Sorry about the oversight! NYT and WSJ in the same 2-day period — a good day for TOTM.

    MH–If AMD’s chips are really so much better than Intel’s and, as you suggest, everyone knows that, then AMD could compete against Intel’s loyalty rebates even without completely matching the discount in dollar amount. Relative quality, like relative price, reflects relative efficiency. Buyers are looking for the best price/quality combination. If AMD could offer that, then they should have no problem competing with Intel’s discounts. Now, they may argue that the discounts forced them below minimum efficient scale, but as I understand things, part of their problem was that they couldn’t meet demand even when operating at full capacity. That suggests that any failure to meet MES was not b/c of Intel’s discounts.

  2. 

    MH: In terms of performance, there is no viable argument that says Intel hasn’t been feverishly innovating (and spending billions to do it) while impoving performance and other chip characteristics at an incredible pace.

    Thom: You may also like my quote from yesterday’s New York Times: “Europe’s case is really predicated on the idea that there will be future harm to A.M.D. It is really hard to find evidence of that now.”

  3. 

    Price might be the only relevant issue if microchips were like aluminum or some other commodity, but anyone who was building their own boxes in 2001 knows that Athlons were far superior to Pentiums in terms of performance (as well as being only slightly cheaper). It is more about choice than price.