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Robert Cooper, Mar 17, 2008
Under U.S. antitrust laws, above-cost price competition is sacrosanct. Accepting the notion that aggressively discounting prices, even though the discounted prices exceed cost, might expose a company to a possible violation of the antitrust laws would turn the antitrust laws upside down. It would chill the very price competition the antitrust laws are meant to promote. It would disadvantage customers, by compelling competitors to keep prices higher to avoid challenges under the antitrust laws from less successful rivals. This is precisely what Advanced Micro Devices (AMD) is trying to do in its lawsuit against Intel. AMD is accusing Intel of nothing more than competing, by offering customers attractive, discounted prices to win their business – prices that were always comfortably above any appropriate measure of Intel’s costs, and almost always exceeded AMD’s price. What AMD wants is a rule requiring a successful competitor like Intel to pull its punches and not compete aggressively on price when faced with competition from a rival offering lower prices. By seeking to change the rules of the game, AMD runs headlong into the teachings of the U.S. Supreme Court that are designed to encourage aggressive price competition by treating it as legally protected competitive conduct.
