Intel maintains innocence despite $1.25 billion cash payoff

Posted by Aharon Etengoff

Intel has agreed to pay AMD $1.25 billion to settle a number of anti-trust and patent cross-licensing disputes. However, the Santa Clara-based company continues to insist that it has always operated within the bounds of the law. 

The agreement between Intel and AMD has now been published and excerpted below.

"The AMD anti-trust lawsuit has been massive and promised to become even more so," Intel CEO Paul Otellini stated during a conference call. "[But] we have not wavered in our conviction that Intel operated within the bounds of the law by competing fairly and legally."

According to Otellini, the time had come for both companies to "take a step back" and re-examine their respective courses of action.

"With most lawsuits there comes a time where both [parties] step back and look to see if spending all that money makes sense. Both companies took that step. After lengthy negotiations, we found a way to move forward and put this behind us," said Otellini. [Nevertheless], we continue to believe discounts are lawful, but understand that others have a different perspective. And it makes a lot of sense for us to stipulate that we won't do things that we both agree are wrong."

Intel maintains innocence despite $1.25 billion cash payoff

As such, the company has agreed to adhere to the following marketing practices:

Intel shall not award, offer, grant pay or extend any discount, rebate or other financial or non-financial benefit, inducement or consideration of any kind that is conditioned orally, in writing or through some other express or implied mutual understanding between Intel and the customer, on the customer limiting or restricting, or agreeing to be limited or restricted in, its freedom to satisfy any or all of its demand from microprocessors for Computer Products through the customer's:

a) Exclusive use of X86 Microprocessors, or platforms for Computer Products that include Intel Microprocessors, in all of its business, or in any geography, market segment, product segment or distribution channel; or

b) Limiting or delaying its purchase or use of specified AMD products on a geographic, platform, market segment, distribution channel, volume, share of purchase, or any other basis." 

In addition, Intel shall not award any benefit that is conditioned orally, in writing or through some express or implied mutual understanding on a customer's:

??- Limiting, depositioning or delaying its marketing, promotion, launch, advertising, production, distribution, sale or branding of any product containing an AMD microprocesor; or

- Forbearance, delay or abstention from participating in, or allowing its products to be featured in exhibited in, any AMD promotional activity, product launch, trade show exhibit, advertising or public relation campaign.

- Shall not withhold or threaten to withhold any Benefit, nor impose or threaten to impose any penalty, on the basis of a customer's refusal to accede to a condition precluded by, or to enter into an understanding prohibited by (other sections of the agreement).

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Otellini explained that the $1.25 billion cash payoff allows AMD to drop its anti-trust suit in return for Intel dismissing its patent breach claims. A separate manufacturing deal has also been struck with the fabulous fab known as Globalfoundries.

"We are actively working to resolve other matters, including class action cases in the state of Delaware and Europe. We continue to cooperate with the US Federal Trade Commission (FTC) and will be explaining the terms of [this agreement] to them," added Otellini. "But the NY Attorney General's case is absolutely without merit as discounts and rebates are standard practices and perfectly legal. We would have preferred to hold a dialogue, but the case has been distorted."

Senior Intel executive Andy Bryant offered a more in-depth explanation of the agreement.

"We at Intel don't punish the customer. So AMD and Intel have agreed to monitor [business practices] and have talks about perception, codifying what we will and won't do going forward," elaborated Bryant. "We will try to establish quarterly meetings during which AMD can come to us [if necessary] for mediation and arbitration. We are offering a [mechanism] to [express] differences and resolve disputes as business people, rather than with lawyers in the courts."

Unsurprisingly, Bryant admitted that both sides had given up more than they would have preferred to seal the agreement. ??"What it got down to really, was the dollar figure. [Eventually], both sides said it was acceptable, but both gave more than they would have liked to."

Indeed, Intel also agreed to refrain from awarding "any benefit" to OEMs and ODMs that are conditioned on limiting on restricting their "freedom to satisfy" any or all of its demands for microprocessors via:

??a) Exclusive use of Intel microprocessors.
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b) Limiting, depositioning or delaying it purchase or use of AMD products on a geographic, platform, market segment, distribution channel, volume, share of purchase, or any other basis.

See Also
Intel-AMD deal doesn't end bitter war
Intel settles antitrust action with AMD