INTEL “REBATES” AND

OTHER WAYS IT HELPED

CUSTOMERS
BUSINESS ETHICS GROUP 4
 Particular Porblems Demand
Important Fact of the Case Decision

1. It is not bribe to reduce the

price

2. It is not punishment for buyers

who shift to AMD

3. It is pure price competition

4.
Who are the Stakeholders ?

INTEL

AMD Public/Consumer

Stakeholder
s

TRADE COMMISSION
1. European
Computer Makers
Commission
Companies :
2.South Korea Fair
DELL,HP, NEC, SONY,
Trade Commission
IBM, TOSHIBA
3.Japan Fair Trade
Commission
1. In your judgement is Intel a “monopoly”? Did Intel use monopoly-like power;
in other words, did Intel achieve its objectives by relying on power that it had
due to its control of a large portion of market? Explain your answer

Numerous buyers and

No Entry/Exit barriers
sellers

Information available Markets parties are

(price/quantity/quality) utility maximizers
Free Not a Free
Market Market…
No external regulator
Goods are similar
to the market

Costs & Benefits

borne by parties
 1. In your judgement is Intel a “monopoly”? Did Intel use monopoly-like power;
in other words, did Intel achieve its objectives by relying on power that it had
due to its control of a large portion of market? Explain your answer

Intel – 74% market

share
2 Dominant Sellers

AMD – 25% market

share Intel tried to
eliminate
But a highly
competition
concentrated
Patents are owned by Prices/Quantities not without
controlled
Oligopoly
the 2 dominant sellers injuring the
market
Multi-billion dollars
facilities owned by the No network effect
No explicit
2 dominant sellers No price fixing
agreement

No restriction on the No No market

negative rights manipulation of allocation
supply
2. In your judgement, were Intel's rebates ethical or unethical? Explain your
answers?

• No bribery
• No price dumping
• No willingness to harm the market
• Only commercial incentives given to laptop manufacturers
3. Was it unethical for Intel to use its compliers and its libraries of software
code in the way it did, or is this permissible for companies in a free market
company? Explain your answer

I don’t find them unethical. They are an issue of pricing. Essentially Intel is
willing to lower prices for their consumers (the companies who use their
products), if they will only use their products.

If you say Intel is unethical company in this case study Dell was unethical in
receiving the rebates. For several years, Dell produced record breaking
profitability without disclosing to investors that the profits were primarily from
the rebates and incentives of Intel, Dell deceived investors by stating the high
profits were due to their sales
4. Were Intel's rebates unethical? Explain why or why not?

to protect Intel’s market segment - thus generating profit for

shareholders

benefit for the ultimate consumer because discounted price

can make better bargain - thus more revenue from sales

There are volume-based discounts from economics of

scale, the more they buy the more they got discounts.
The antitrust laws exist to protect consumers –by ensuring consumers
get the best possible products at the lowest possible prices.

The antitrust laws do not protect competitors from aggressive,

relentless competition –to the contrary, the antitrust laws affirmatively
encourage such competition.

Far from being anticompetitive, competing hard –and negotiating

aggressively –to convince a customer to buy your productsand not
your competitor‟s is what competition is all about.

Providing discounts and rebates to win business is procompetitive.

Competing to win –and winning –all of a customer‟s business is
procompetitive.That‟s what Intel did.
Thank You！