Japan Watchdog Rules Against Intel's Japan Unit

Japan's anti-monopoly watchdog on March 8 said it had found against the local unit of U.S. microchip maker Intel Corp. for using "unfair" practices to secure customers. The Fair Trade Commission said Intel Japan K.K. was suspected of violating the country's anti-monopoly law by offering discounts and rebates to five Japanese firms if they did not buy microprocessors from rival companies.

Intel itself rejected the finding, which was issued in the form of a recommendation, giving Intel Japan until March 18 to respond. If the advice is rejected, the government commission said it would consider taking action against the company.

"Intel continues to believe its business practices are both fair and lawful," Intel said in a statement. "The company is evaluating the assertions and the recommendation before deciding next steps."

The commission said that Intel Japan had "effectively limited competition in the area of marketing central processing units [microprocessors] intended for domestic personal computer makers."

The watchdog said the financial incentives had been offered to five firms -- NEC, Toshiba, Hitachi, Fujitsu and Sony -- from May 2002 when they used Intel microprocessors for 90% to 100% of their personal computers or installed them in a number of their best-selling products.

The commission told Intel Japan to educate its employees engaged in microprocessor sales on anti-monopoly rules and conduct regular inspections on the matter by its legal officials.

Intel said the Japanese commission might not be taking into account "antitrust principles commonly accepted worldwide."

"There is a broad consensus that competition regulators should only intervene where there is evidence of harm to consumers," Intel Vice President and General Counsel Bruce Sewell said in the statement. "It is apparent that the (commission's) recommendation did not sufficiently weigh these important principles."

Intel's market share in Japan jumped from 76% in 2002 to 89% in 2003, apparently due to the sales practice, limiting sales by its main Silicon Valley rival Advanced Micro Devices (AMD), the commission said in the statement. The other company selling microprocessors to personal computer makers in Japan is Transmeta Corp.