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UPDATE 5-Japanese trade officials raid Intel offices
April 08, 2004 11:27:00 AM ET
(Recasts, adds background on investigations)
By Kunihiko Kichise and Daniel Sorid
TOKYO/SAN FRANCISCO, April 8 (Reuters) - Japan's fair trade watchdog raided three Intel Corp. (INTC) offices near Tokyo on Thursday, and a Japanese government official said the world's largest chip maker was suspected of breaking antitrust laws.
"They have worked to prevent other processor makers from supplying personal computer manufacturers," the official said.
The move comes about six weeks after Japanese officials said they were investigating Microsoft's Japanese unit on suspicion of violating antitrust laws.
In morning trade on Nasdaq, Intel shares were off 8 cents to $27.54, but technology stocks were broadly higher on positive news from Dell Inc. (DELL) and Yahoo Inc. (YHOO).
Intel, whose processors are used in four of every five personal computers worldwide, is cooperating fully with the probe by Japan's Fair Trade Commission (FTC), company spokesman Chuck Mulloy said.
Intel's main rival, Advanced Micro Devices Inc. (AMD), has been an outspoken critic of Intel's business practices, and its complaints more than three years ago led European regulators to open up their own investigation.
Shun Yoshizawa, director of corporate marketing at AMD Japan, said FTC officials also went to AMD offices on Thursday but emphasized that it was not a raid, and said it plans to cooperate with the investigation.
"The FTC is doing this on suspicion that Intel might have broken an antitrust law, that's the only thing we know," Yoshizawa said.
Local media said Japanese regulators were investigating whether Intel intentionally undercut competitors with large discounts and threatened to stop shipments unless PC makers used its chips.
Japan is the world's No. 3 personal computer market after China and the United States. PC shipments in Japan grew 2.9 percent to 12.7 million in 2003, according to Gartner Dataquest.
Business in Japan accounted for 9 percent, or $2.7 billion, of Intel's $30.1 billion in total revenue in 2003. The Japan revenues marked a 42 percent rise from 2002.
A HISTORY OF INVESTIGATIONS
Intel has faced probes by antitrust regulators before over how it uses its dominant market position, but it has not been subjected to the intensity of investigations faced by Microsoft Corp. (MSFT), whose operating system software runs on most of the world's PCs.
In the United States, Intel faced a three-year investigation by the Federal Trade Commission that ended in 1993 with no action taken. In 1997, the commission opened up another investigation into Intel's business practices, which led to a settlement in 1999 that limited the company's ability to cut ties with customers that sue it.
In Europe, regulators announced in 2001 that they were investigating Intel's marketing practices in response to AMD complaints that the company had used its market position to reward some customers and punish others to ensure loyalty.
An antitrust case against Microsoft in Europe resulted in a fine of 497 million euros ($601 million) last month. Microsoft has said it will appeal the ruling.
Intel provides marketing subsidies to PC makers that include the "Intel Inside" logo in their advertisements. ($1=0.82 euro) (Additional reporting by Daisuke Wakabayashi, Kiyoshi Takenaka and Nathan Layne) REUTERS
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