Intel 2014 Annual Report Download - page 108

INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Government Competition Matters and Related Consumer Class Actions
A number of proceedings generally have challenged and continue to challenge certain of our competitive practices. The
allegations in these proceedings vary and are described in more detail in the following paragraphs. In general, they contend that
we improperly conditioned price rebates and other discounts on our microprocessors on exclusive or near-exclusive dealing by
some of our customers; and they allege that our software compiler business unfairly preferred Intel
®
microprocessors over
competing microprocessors and that, through the use of our compilers and other means, we have caused the dissemination of
inaccurate and misleading benchmark results concerning our microprocessors. Based on the procedural posture of the various
remaining competition matters, which we describe in the following paragraphs, our investment of resources to explain and defend
our position has declined as compared to the period 2005-2011. Nonetheless, certain of the matters remain active, and these
challenges could continue for a number of years, potentially requiring us to invest additional resources. We believe that we
compete lawfully and that our marketing, business, intellectual property, and other challenged practices benefit our customers
and our stockholders, and we will continue to conduct a vigorous defense in the remaining proceedings.
In 2001, the European Commission (EC) commenced an investigation regarding claims by Advanced Micro Devices, Inc. (AMD)
that we used unfair business practices to persuade customers to buy our microprocessors. We received numerous requests for
information and documents from the EC and we responded to each of those requests. The EC issued a Statement of Objections
in July 2007 and held a hearing on that Statement in March 2008. The EC issued a Supplemental Statement of Objections in July
2008. In May 2009, the EC issued a decision finding that we had violated Article 82 of the EC Treaty and Article 54 of the
European Economic Area Agreement. In general, the EC found that we violated Article 82 (later renumbered as Article 102 by a
new treaty) by offering alleged “conditional rebates and payments” that required our customers to purchase all or most of their
x86 microprocessors from us. The EC also found that we violated Article 82 by making alleged “payments to prevent sales of
specific rival products.” The EC imposed a fine in the amount of €1.06 billion ($1.447 billion as of May 2009), which we
subsequently paid during the third quarter of 2009, and ordered us to “immediately bring to an end the infringement referred to in”
the EC decision.
The EC decision contained no specific direction on whether or how we should modify our business practices. Instead, the
decision stated that we should “cease and desist” from further conduct that, in the EC’s opinion, would violate applicable law. We
took steps, which are subject to the EC’s ongoing review, to comply with that decision pending appeal. We had discussions with
the EC to better understand the decision and to explain changes to our business practices.
We appealed the EC decision to the Court of First Instance (which has been renamed the General Court) in July 2009. The
hearing of our appeal took place in July 2012. In June 2014, the General Court rejected our appeal in its entirety. In August 2014,
we filed an appeal with the European Court of Justice. On November 11, 2014, Intervener Association for Competitive
Technologies filed comments in support of Intel’s grounds of appeal. The EC and interveners filed briefs in November, after which
the Court of Justice is likely to allow the parties to file a final round of briefs by February 2015. The Court of Justice is likely to
hold oral argument in late 2015 and issue its decision in 2016.
At least 82 separate class-action lawsuits have been filed in the U.S. District Courts for the Northern District of California,
Southern District of California, District of Idaho, District of Nebraska, District of New Mexico, District of Maine, and District of
Delaware, as well as in various California, Kansas, and Tennessee state courts. These actions generally repeat the allegations
made in a now-settled lawsuit filed against us by AMD in June 2005 in the U.S. District Court for the District of Delaware (AMD
litigation). Like the AMD litigation, these class-action lawsuits allege that we engaged in various actions in violation of the
Sherman Act and other laws by, among other things: providing discounts and rebates to our manufacturer and distributor
customers conditioned on exclusive or near-exclusive dealing that allegedly unfairly interfered with AMD’s ability to sell its
microprocessors; interfering with certain AMD product launches; and interfering with AMD’s participation in certain industry
standards-setting groups. The class actions allege various consumer injuries, including that consumers in various states have
been injured by paying higher prices for computers containing our microprocessors. We dispute these class-action claims and
intend to defend the lawsuits vigorously.
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