[gU9x3u8XmQNG]

I’m surprised to see no, though few in total, comments related to the vendors accepting the money.

It’s shocking that Acer, HP, and Lenovo all accepted incentives (money) to monopolise the market, and are just as guilty in my opinion.

This seems to be black and white, obviously inappropriate; yet has taken decades and still unresolved.

Really…

[shkkmo]

It think the general rule of thumbs is that accepting money to help other companies monopolize their markets is fine as long as you don't try to monopolize your own.

Personally, I think that all the stuff like this should also be illegal, even without a monopoly. Exclusivity contracts and stuff with that goal should be illegal.

However, we'll have to pass new laws to get there.

[avar]

Is general it's not so clear cut.

If I make wheat and you run a bakery I might offer you a 30% discount for the next 5 years, but only if I'm your only wheat supplier.

This sort of arrangement allows us to spread the risk of market uncertainties over that period.

I can then build extra capacity, and you get a cheaper product, or one with less price uncertainty.

Maybe we should do away with this, and say that bakeries must buy wheat like airlines buy fuel, i.e. through more complex financial instruments.

Now, I may be doing this because I'm one of only two companies making wheat, and I'm looking to drive the other one out of business. That's basically what Intel was doing here.

But it's not clear to me that we should conclude that exclusivity deals in general are bad.

[bruce511]

I agree, and it works the other way to.

Say I'm a local wheat producer. I sign a deal with the local bakery. That stops a multi-national from undercutting me.

The contract cements the benefit that both I and the bakery have from mutually working together, and removes the risk to both parties of some outside party damaging both of us.

In other words exclusivity works for small companies in spaces dominated by behemoths.

Think craft beer and local pub.

[Jochim]

It's far more likely that the multi-national has already signed such a contract with the bakery, preventing you from entering the market in the first place.

Even if you were to get there first, when the contract comes up for renewal the multi-national can offer terms that would be unsustainable for a small producer.

[shkkmo]

The primary "risk" removed here is competition. I think exclusivity contracts as a risk hedging tool are bad for the economy. If you need to hedge price risk, we should use insurance or other financial tools for that. Additionally, you can have contracts that lock in prices and quantities without requiring exclusivity.

I would be bummed if my local tap roomed signed an exclusivity contract with a local brewery. These days there often many local breweries and new ones open regularly. It would be a shame for the local taproom to miss out on offering a wider range of beers because they got locked into an exclusivity contract.

If you are providing a discount or kickback or whatever for exclusivity, that is an anticompetitive behavioral, regardless of size.

[ncallaway]

They should be illegal if the company owns or controls 5% or more of the given market.

[ethbr1]

There's a visibility question too.

If Intel comes to my computer company and offers me a sweet rebate, what do I know about what they're doing with my competitors?

So if it were illegal to receive money to help a company monopolize their market, how would the company receiving the funds be able to determine that's the case?

[RachelF]

Dell as well.

In fact in 2007 Dell would have made a loss if it weren't for the Intel kickbacks.

[makeitdouble]

It's a good point, and would be the right thing to do in this case, but I think it opens a can of worms than even the EU is no ready to open now.

It goes down to "are exclusive deals illegal ?" and I'd assume it could go as far as small companies accepting to get bought by the market behemoth, or employees getting paid under no-compete contracts to not work at rival companies.

[lambdasquirrel]

I think there'd need to be both regulation and enforcement in order to make that work out. If you consider 1. the game-theoretic problem that the vendors have (specifically the prisoner's dilemma), and 2. the fact that many of them seem to operate on smaller margins and 3. certainly do not have the benefit of operating from monopoly that Intel had, it may be that accepting the bribes is the way to go. Are you going to wait 10, 20, maybe 30 years for some government to finally step in on your competitors that accepted the bribes?

[danmur]

Yep 100%. This wasn't a one-player game.

[ilyt]

Not that shocking really. They take parts, put it in boxes and sell it to customers that don't care much whether label in part says Intel or AMD.

If Intel gonna say "we literally will pay you more to use our parts", that's pure profit to them, customers still gonna buy it because if they cared more about the CPU than the rest of the value propositon of Dell/Lenovo they wouldn't buy from them in the first place.

[lost_tourist]

it's not really all that surprising when you think it through. this has the same affect, without tying up their limited number of lawyer for years. sometimes you just have to compromise.

[Jensson]

Are there any laws prohibiting you from accepting these deals?

[indymike]

Rebates are usually legal in the US, but go to the distributor or the final buyer. I used to sell huge amounts of computer hardware at a small loss, and a month later would be making 15-20% profit once rebates were paid to my company.

Bribes are paid by (or directed to be paid to someone else by) the person who is buying (or a sales representative selling) and their employer never sees the money. That's why direct incentives to salespeople (spiffs) should be authorized in writing, by the employer. An example of a bribe would be a purchasing agent requiring me to donate 5% of the deal value to their church to get a deal.

[mnau]

Bribery is illegal for the person bribing and the person being bribed.

Generally the person who is bribing has higher penalty, because she is an instigator, but both are culpable.

It makes sense, by accepting the bribe, you do damage to some third party. "I was stealing, but only because he offered me money"... nope.

At least in my country and I assume in the rest of EU countries.

[Jensson]

Offering a good deal isn't bribery. Bribery is when you give a decisionmaker money to make him make decisions against the wishes of the organization he represents. In this case it is in the interests of these companies to take these deals since they were good for them, they weren't bribed to take it.

[denton-scratch]

> because she is an instigator

Not sure about that.

"I will only stock your product if you can make the deal sweeter for me than your competitor is offering to do."