Intel (INTC) Bribes AMD (AMD) To Settle Antitrust Issues

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AMD (NYSE:AMD) has had a pretty strong antitrust claim against Intel (NASDAQ:INTC). Intel allegedly gave money to PC companies to use its chips and bullied customers using it huge market share. AMD’s profits disappeared and the company nearly went out of business.

AMD’s claims have been partially justified by antitrust investigations and actions by the EU, US regulators, and the New York State Attorney General’s office. Intel faces punishments and probably large fines for its behavior, if authorities can make their cases. The EU already has fined the world’s largest chip company and Intel is appealing the judgement.

Today, Intel and AMD settled their antitrust suit amicably as Intel paid AMD $1.25 billion. It is a sort of a bribe to a faltering company that could use the cash. It come nowhere close to matching the amount of market cap that investors has seen disappear.

Under terms of the agreement, AMD and Intel obtain patent rights from a new 5-year cross license agreement, Intel and AMD will give up any claims of breach from the previous license agreement. AMD will drop all pending litigation including the case in U.S. District Court in Delaware and two cases pending in Japan. AMD will also withdraw all of its regulatory complaints worldwide.

It was OK for AMD to sell-out rather than fight on for what might be several years., but it should have gotten a better price for its shareholders

Douglas A. McIntyre

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