Froeb’s method analysis AMD lawsuit case against Intel
Intel’s move to make large loyalty payments to HP was to secure its customer base and ensure that HP would become their loyal customer. The act was to resolve any incentive conflict that could arise, and by so doing, intel secured a market for their chips as HP shifted from its former supplier, AMD. The loyalty payments made attracted huge profits for Intel,an incentive that had a conflict of interest and act violated the antitrust laws. Intel offered loyalty payments discriminating against other companies. It did not consider informing other customers about the loyalty rewards available at that time. Though loyalty payments made intended to drive the sales of their chips, it was unwise to discriminate against other customers .it was an uninformed decision for intel to use large loyalty payments to drive away their competitors, and violated the Robinson-Patman Act.
AMD lost HP as their long-time customer, but it later realized the concessions by Intel were not offered in good faith but were profits driven. It discovered that Intel violated antitrust laws. It was able to win the lawsuit they had against Intel. Although the win did not guarantee a come back for HP as their customer, it secured AMD about 1.25 billion dollars. It is clear that violation of antitrust laws leads to losses from penalties endowed from lawsuits. However, intel did not consider a possibility of such when it offered discriminatingly significant loyalties to HP. Their action was sales- driven and profit-motivated. Securing the market for their chips was the main objective.
In conclusion, Intel’s quest to solve the incentive conflict and up the sales led to a conflict of interest and violated antitrust laws, a move that caused more damage than good.