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July 26, 2007, Alert No. 1,617.
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European Commission Initiates Proceeding Against Intel Alleging Anticompetitive Behavior

7/27. The European Commission (EC) announced in a release that it has "has sent a Statement of Objections (SO) to Intel on 26th July 2007. The SO outlines the Commission's preliminary view that Intel has infringed the EC Treaty rules on abuse of a dominant position (Article 82) with the aim of excluding its main rival, AMD, from the x86 Computer Processing Units (CPU) market."

The EC asserted in its release that "Intel has engaged in three types of abuse of a dominant market position. First, Intel has provided substantial rebates to various Original Equipment Manufacturers (OEMs) conditional on them obtaining all or the great majority of their CPU requirements from Intel."

"Secondly, in a number of instances, Intel made payments in order to induce an OEM to either delay or cancel the launch of a product line incorporating an AMD-based CPU."

"Thirdly, in the context of bids against AMD-based products for strategic customers in the server segment of the market, Intel has offered CPUs on average below cost", wrote the EC.

It added that "These three types of conduct are aimed at excluding AMD, Intel's main rival, from the market."

AMD complained to the EC, and is now the primary beneficiary of the EC's action. AMD's EVP for Legal Affairs, Thomas McCoy, stated in a release that "Consumers know today that their welfare has been sacrificed in the illegal interest of preserving monopoly profits. Intel has circled the globe with a pattern of conduct, including direct payments, in order to enforce full and partial boycotts of AMD. The EU action obviously suggests that Intel has, once again, been unable to justify its illegal conduct".

AMD added the Japan Fair Trade Commission (JFTC) took legal action against Intel in 2005, and that Korea is currently investigating Intel.

See also, story titled "Intel Accepts Recommendation of Japanese FTC Regarding Anticompetitive Marketing Practices" in TLJ Daily E-Mail Alert No. 1,107, April 1, 2007.

Intel's General Counsel, Bruce Sewell, responded in a release that "The case is based on complaints from a direct competitor rather than customers or consumers."

"We are confident that the microprocessor market segment is functioning normally and that Intel's conduct has been lawful, pro-competitive, and beneficial to consumers", said Sewell. "The evidence that this industry is fiercely competitive and working is compelling. When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly."

The EC also elaborated on its procedures. "A Statement of Objections is a formal step in Commission antitrust investigations in which the Commission informs the parties concerned in writing of the objections raised against them. The addressee of a Statement of Objections can reply in writing to the Statement of Objections, setting out all facts known to it which are relevant to its defence against the objections raised by the Commission. The party may also request an oral hearing to present its comments on the case."

Intel added that the EC's SO "contains only preliminary allegations and does not itself amount to a finding that there has been a violation of European Union law. Intel will now be given the chance to respond directly to the Commission's concerns as part of the administrative process."

The U.S. Department of Justice's (DOJ) Antitrust Division has not brought a parallel or related action against Intel. Moreover, the EC's competition related actions sometimes lack the basis in rigorous economic analysis, and a finding of harm to consumers, that usually but not always characterize actions by the U.S. DOJ or Federal Trade Commission (FTC).

The EC stands to collect substantial fines from Intel.

2nd Circuit Vacates in In Re WorldCom Securities Litigation

7/26. The U.S. Court of Appeals (2ndCir) issued its opinion [20 pages in PDF] in In Re WorldCom Securities Litigation, vacating the judgment of the District Court.

The California Public Employees Retirement System (CalPERS), and numerous other state and local pension funds and private pension funds, that are bondholders of WorldCom, filed class action complaints against bond underwriters of WorldCom alleging violation of Section 11 of the Securities Act of 1933 in connection with their filing of registration statements containing allegedly false and misleading information.

The relevant statute of limitations provides that an action must be brought "within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence."

These complaints were filed more than one year after the plaintiffs (CalPERS and others) were put on inquiry notice of the misinformation in the registration statements. However, other class action complaints were filed by other bond purchasers within the one year limitation. Those class action plaintiffs claimed to represent the plaintiffs in the present action.

The U.S. District Court (SDNY) dismissed the action as time barred. The plaintiffs in this action brought the present appeal.

The Court of Appeals vacated the judgment of the District Court and remanded.

It wrote that "The question presented is whether the filing of a complaint asserting a class action tolls the statute of limitations for putative class members who file individual suits (asserting the same claims) prior to the class certification decision." (Parentheses in original.)

Applying the opinion of the Supreme Court in American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), it held that "the filing of a class action tolls the statute of limitations for all members of the asserted class, regardless of whether they file an individual action before resolution of the question whether the purported class will be certified."

This case is In Re WorldCom Securities Litigation, U.S. Court of Appeals for the 2nd Circuit, App. Ct. No. 05-6979-cv, an appeal from the U.S. District Court for the Southern District of New York. Judge Leval wrote the opinion of the Court of Appeals, in which Judges Feinberg and Cabranes joined.

More News

7/27. The U.S. Department of Commerce (DOC) announced that it will co-host a two day conference on October 15-16, 2007, in Washington DC titled "Cross Border Data Flows, Data Protection, and Privacy". The hosts will be the DOC, the European Commission (EC), and the Article 29 Working Party on Data Protection. The DOC seeks comments. See, notice in the Federal Register: July 27, 2007, Vol. 72, No. 144, at Page 41290.

7/25. The Copyright Office (CO) published a notice in the Federal Register on July 6, 2007, that announces, describes, recites, and sets the effective date (July 6, 2007) for, its interim rules regarding online registration of copyright. The CO also announced in this notice that it seeks comments on these interim rules. The deadline to submit comments is September 4, 2007. See, Federal Register, July 6, 2007, Vol. 72, No. 129, at Pages 36883-36889. The CO published a notice in the Federal Register on July 25, 2007, that contains minor corrections to its original notices. See, Federal Register, July 25, 2007, Vol. 72, No. 142, at Pages 40745-40746.

Washington Tech Calendar
New items are highlighted in red.
Friday, July 27

The House will meet at 9:00 AM for legislative business. The House will consider HR 2419 [LOC | WW], the "Farm Bill Extension Act of 2007", which addresses the U.S. Department of Agriculture's (USDA) Rural Utilities Service's (RUS) loans for broadband services. See, story titled "House Agriculture Committee Approves Rep. Space's RUS Broadband Loans Amendment" in TLJ Daily E-Mail Alert No. 1,613, July 20, 2007. The House may also consider the conference report on HR 1. Title VIII of this bill pertains to a reconstitution of the Privacy and Civil Liberties Oversight Board (PCLOB), the Department of Homeland Security's (DHS) Privacy Office, and privacy officers at other agencies. It also includes the "Federal Agency Data Mining Reporting Act of 2007". It also addresses interoperable emergency communications.

The Senate will meet at 9:30 AM. It will resume consideration of HR 2638 [LOC | WW], the "Department of Homeland Security Appropriations Act, 2008".

POSTPONED. 9:30 AM. The House Judiciary Committee (HJC) will hold a hearing on HR 2128 [LOC | WW], the "Sunshine in the Courtroom Act of 2007", a bill that would allow the U.S. Supreme Court, U.S. Courts of Appeals and U.S. District Courts to "permit the photographing, electronic recording, broadcasting, or televising to the public of any court proceeding". See, notice. Location: Room 2141, Rayburn Building.

1:50 PM? President Bush will award National Medals of Technology and National Medals of Science at a White House ceremony. Location: East Room, White House, 1600 Pennsylvania Ave., NW.

4:00 - 5:00 PM. The Department of Commerce (DOC) will host a reception and speaking event related to the award of National Medals of Technology and National Medals of Science. Location: DOC, Main Lobby, 14th Street Entrance.

Monday, July 30

5:00 PM. The National Science Foundation (NSF) will host a closed meeting, on site and by teleconference, regarding an Office of the Inspector General report. See, notice in the Federal Register, July 18, 2007, Vol. 72, No. 137, at Page 39467. Location: National Science Board Office, NSF, 4201 Wilson Blvd., Arlington, VA.

Deadline to submit initial comments to the Federal Communications Commission (FCC) in response to its request to refresh the record of its 2001 Further Notice of Proposed Rulemaking (FNPRM) regarding "the status of the market for the provision of telecommunications services in Multiple Tenant Environments (MTEs), and on whether the prohibition on exclusive access contracts in commercial MTEs should be extended to residential MTEs". See, notice in the Federal Register, May 30, 2007, Vol. 72, No. 103, at Pages 29928-29929. This item is DA 07-1485 WT Docket No. 99-217 and CC Docket No. 96-98.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its Draft Special Publication 800-38D [29 pages in PDF] titled "Recommendation for Block Cipher Modes of Operation: Galois/Counter Mode (GCM) for Confidentiality and Authentication".

Tuesday, July 31

9:00 AM - 4:30 PM. The U.S.-China Economic and Security Review Commission (USCC) will hold a hearing. The USCC web site stated that the title is "Freedom of Expression in China: Internet and Media Controls". The USCC's notice in the Federal Register states that the hearing is titled "Access to Information in the People's Republic of China", and that it will examine "developments in Chinese information control mechanisms". See, Federal Register, July 18, 2007, Vol. 72, No. 137, at Pages 39479-39480. Location: Room 385, Russell Building, Capitol Hill.

10:00 AM. The Federal Communications Commission (FCC) will hold an event titled "Open Meeting". The FCC stated that it will adopt rules regarding the upcoming auction of spectrum usage rights in 700 MHz band for wireless services (WT Docket No. 06-150, etc.), and an order regarding roaming obligations of CMRS providers (WT Docket Nos. 05-265 and 00-193). See, FCC agenda [2 pages in PDF] and notice in the Federal Register, July 27, 2007, Vol. 72, No. 144, at Pages 41326-41327. The event will be webcast by the FCC. The FCC does not always follow its published agenda. Location: FCC, Commission Meeting Room, Room TW-C305, 445 12th St., SW.

10:00 AM. The House Judiciary Committee's (HJC) Subcommittee on Courts, the Internet and Intellectual Property (SCIIP) will hold a hearing titled "Ensuring Artists Fair Compensation: Updating the Performance Right and Platform Parity for the 21st Century". See, notice. Location: Room 2141, Rayburn Building.

Deadline to submit comments to the National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) regarding its Draft Special Publication 800-53A [PDF] titled "Guide for Assessing the Security Controls in Federal Information Systems".

Wednesday, August 1

9:00 AM - 1:30 PM. The U.S. Chamber of Commerce will host a conference titled "Lawsuits and Global Competitiveness: Is the U.S. Litigation System a Beacon or Barrier to Foreign Investment?". See, notice. Prices vary. For more information, contact Danielle Walker at 202-463-5500 or ncfevents at uschamber dot com. Location: Chamber, 1615 H St., NW.

12:30 PM. Sen. Joe Biden (D-DE), Chairman of the Senate Foreign Relations Committee, will give a speech. Location: Ballroom, National Press Club, 529 14th St. NW, 13th Floor.

2:30 PM. The Senate Commerce Committee (SCC) will hold a hearing titled "Oversight of the U.S. Department of Commerce". See, notice. Location: Room 253, Russell Building.

Thursday, August 2

10:00 AM. The Senate Commerce Committee (SCC) will meet in executive session. See, notice. Location: Room 253, Russell Building.

Friday, August 3

Deadline to submit comments to the U.S. Patent and Trademark Office (USPTO) in response to its requests for comments regarding its collection of information to facilitate its forecasting the number of future patent applications. See, notice in the Federal Register, June 4, 2007, Vol. 72, No. 106, at Pages 30777-30779.

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