Saturday, June 21, 2008

Intel's anti-trust troubles

Joe Nocera on A.M.D. and its war with Intel:

Let’s start with a simple question: Are discounts good or bad? When I put it like that, the answer is obvious: discounts are clearly good. They allow consumers to buy things at lower prices. Indeed, price competition is at the very heart of free-market capitalism, and it is the natural result of competition. It’s what we as a society want companies to do.

For as long as we’ve had antitrust laws in the United States, predatory pricing — pricing intended solely to prevent a rival from being able to compete — has been against the law. After all, if a big company drops its prices on a short-term basis to drive a smaller rival out of business — and then can raise prices with impunity because it has eradicated its competitor — consumers are ultimately harmed by the price cuts.

But our definition of predatory pricing has tended to vary over time. ...