EU regulators raid Intel offices

ANTITRUST regulators in Europe have raided the offices of processor giant Intel and several computer retails as part of an investigation of restrictive trade practices.

In a prepared statement, the European Commission said its officials had carried out “unannounced inspections at the premises of a manufacturer of central processing units (CPUs) and a number of personal computer retailers.

Intel has since confirmed that it is the manufacturer whose offices were raided. The German consumer electronics retailer Media Markt and Britains DSG are also understood to have been raided as part of the investigation.

“The Commission has reason to believe that the companies concerned may have violated EC Treaty rules on restrictive business practices (Article 81) and/or abuse of a dominant market position,” the Commission said in a statement.

The investigation and the premises’ raids are thought to be the first stage of a response to complaints to the EC about Intel market behaviour from rival Advanced Micro Devices.

Intel is already the subject of formal EU charges of monopoly abuse of market power, for allegedly customer rebates at below cost and for allegedly bullying customers into staying away from AMD.

Intel has said it would cooperate with the regulatory authorities.

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EU clears IBM-Cognos merger

European competition regulators have given the green light to IBM’s US$5 billion (A$5.7 billion) acquisition of Canada-based business intelligence software developer Cognos.

The European Commission yesterday ruled the acquisition would not significantly impede effective competition.

The Commission examined the effects that the proposed merger would have on the business analytics sector and its various sub-divisions.

“In each instance, the Commission found that the horizontal overlap between the parties' activities would not give rise to competition concerns, since the parties' combined market share would be moderate,” the Commission said in a statement.

“The combined IBM/Cognos entity would continue to face several strong competitors and customers would find sufficient alternative suppliers of such software products,” it said.

The Commission's investigation found no significant risk that the merged entity would be able to close off competitors from the market.

IBM's and Cognos' positions in their respective segments of enterprise application software (EAS) would not provide sufficient incentives to prevent standalone business analytics software vendors from integrating with their EAS platforms.

The acquisition is expected to be completed during the current quarter. Cognos employs 4,000 people globally and generated revenue last year of just under US$1 billion.

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EU opens new Microsoft probe

ANTITRUST regulators in the US have Microsoft in their sights again, opening two new investigations over alleged infringements of competition rules.

One complaint relates to interoperability issues, with a European standards committee saying Microsoft does not adequately disclose interoperability information on a wide range of products ranging from its Office suite to its .NET framework.

In a statement, the European Commission said that in its Microsoft judgment of September last year, the Court of First Instance had confirmed principle that must be respected by dominant companies as regards interoperability disclosures.

The complaint by the European Committee for Interoperable Systems says Microsoft is alleged to have illegally refused to disclose interoperability information.

The Commission's investigation will focus on Office, .NET and other product areas, and will include an investigation of whether Microsoft's new file format Office Open XML, as implemented in Office, is sufficiently interoperable with competitors' products.

The second area where proceedings have been opened is in tying of separate software products following a complaint by the open source browser, Opera. Microsoft is alleged to have engaged in illegal tying of its Internet Explorer product to its dominant Windows operating system.

The complaint alleges that there is ongoing competitive harm from Microsoft's practices, in particular in view of new proprietary technologies that Microsoft has allegedly introduced in its browser that would reduce compatibility with open internet standards, and therefore hinder competition.

Microsoft said it would cooperate fully with the investigation. “We are committed to ensuring that Microsoft is in full compliance with European law and our obligations as established by the European Court of First Instance in its September 2007 ruling,” the company said in a statement.

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Apple scraps European iTunes policy

APPLE has sidestepped a potentially costly battle with European competition regulators, announcing it will charge the same amount for iTunes music throughout the European Union.

The company has instead set up a possible showdown with record labels in the UK over wholesale pricing.

Apple has been charging about nine US cents per song more for music on its UK iTunes store compared to the standard prices its charges for iTunes music across the rest of Europe.

The European Commission had begun an investigation of the pricing differences after it received a complaint from the UK consumer protection organisation Which?

Apple announced yesterday that within six months it will lower the prices it charges for music on its UK iTunes store to match the already standardized pricing on iTunes across Europe.

It said it would now reconsider its continuing relationship in the UK with any record label that does not lower its wholesale prices in the UK to the pan-European level within six months.

Commenting on the outcome, European Competition Commissioner Neelie Kroes said “The Commission is very much in favour of solutions which allow consumers to benefit from a truly Single Market for music downloads.”

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Europe extends DoubleClick scrutiny

REGULATORS in Europe have intensified its scrutiny of the proposed Google-DoubleClick merger, saying its initial investigation had revealed competition concerns.

The European Commission issued a statement this week saying it had opened an in-depth investigation into the proposed acquisition under EU merger regulation.

“The Commission’s initial market investigation indicated that the proposed merger would raise competition concerns in the markets for intermediation and ad serving in online advertising,” the statement said.

It now has 90 working days to make a final decision on whether the transaction would impede effective competition.

The Australian Competition and Consumer Commission (ACCC) is also looking at the possible impact of the proposed acquisition.

The further Commission investigation will look in particular at whether DoubleClick would have grown into an effective competitor of Google in the market for online ad intermediation if the acquisition did not take place.

It will also investigate whether the merger, which combines the leading providers online advertising space and intermediation services, with ad serving technology, could lead to anti-competitive restrictions and harm consumers.

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EC charges Intel with competition breach

CHIP-making giant Intel has rejected European Commission charges that it engaged in anti-competitive practices, arguing that its market behaviour in Europe was both legal and in the interests on consumers.

The European Commission says Intel has engaged in monopoly abuse to lock its competitor AMD from accessing new customers. Intel has ten weeks to respond formally to the charges, which could ultimately lead to fines running to hundreds of millions of dollars.

The commission said Intel had given substantial rebates to PC manufacturers for buying their x86 processors and that the company paid the manufacturers to either delay or discontinue making products that used AMD processors.

It said Intel also made below cost bids for business in accounts where AMD was a competitor.

The commission said each of the three types of behaviour were both anti-competitive and against the law, but added the combination of the three showed an anti-competitive strategy that damaged both AMD and the market.

“The Commission also considers at this stage of its analysis that the three types of conduct reinforce each other and are part of a single overall anticompetitive strategy,” it said.

Intel senior vice-president and general counsel Bruce Sewell said the company rejected the charges and welcomed the chance to address them.

“We are confident that the microprocessor market segment is functioning normally and that Intel's conduct has been lawful, pro-competitive, and beneficial to consumers,” Mr Sewell said.

“While we would certainly have preferred to avoid the cost and inconvenience of establishing that our competitive conduct in Europe has been lawful, the Commission's decision to issue a Statement of Objections means that at last Intel will have the opportunity to hear and respond to the allegations made by our primary competitor,” he said.

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EU to rule in Microsoft anti-trust case

THE long-running European Union anti-trust case against
Microsoft will come to a conclusion in two months, with the EU court hearing the case announcing it hand down a decision on September 17.

The case has been one of the longest and most-watched regulator actions in EU history – not least because Microsoft has so vehemently resisted.

The European Court of Final Instance, the second highest court in the EU judicial infrastructure, said it would release its decision at 9.30 in the morning on September 17.

The European Commission fined Microsoft Euro497 million (A$784 million) for abuse of its market power related to the distribution of its Windows desktop and server operating systems.

Much of the court action related to the Microsoft Media Player software. Microsoft was ordered in 2004 to sell versions of Windows without Media Player, as well as to make available the software code underpinning Windows to allow Media Player competitors better access to the Windows desktop.

Microsoft appealed those decisions in the European Court of First Instance in April last year.

In July last year, the European Commission daily fines that have added up to nearly Euros300 million for not adhering to the ruling. Microsoft has paid the fines, but is appealing the decision that applied them – and clearly wants its money back.

While the court ruling is being closely watched, and will give direction to the dispute, it may not be the end.

Microsoft said in a statement: “We look forward to receiving the court's judgement and continue to work with industry and government on the best way to serve the needs of customers and communities in Europe.”

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EU canes service providers on copyright

DRAFT changes to copyright laws in Europe has switched responsibility for breaches from the end-user to the online service provider and network.

The draft criminalises copyright breaches for companies with services or networks that are used to carry illegally copied material, meaning employees could face jail time for corporate breaches.

The controversial draft law from the European Commission has widespread implications for IT companies across the industry, but could make life especially difficult for firms like video-sharing giant YouTube, or music sharing services like LimeWire.

The initiative has already created an alliance of the strangest of bedfellows, with open source and freeware organisations like the Foundation for a Free Information Infrastructure joining in opposition corporate lobby groups like the Business Software Alliance.

The draft law aims to curb copying of copyright-protected music, film and software. But opponents of the draft are concerned about a clause that criminalises the aiding and abetting, or incitement to infringe an intellectual property – by providing the service or network service that allows the copying.

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