New York attorney general files antitrust suit against Intel

Thursday, November 5, 2009
NEW YORK (AFP) - – New York's attorney general filed an antitrust lawsuit against Intel Corp. on Wednesday alleging the US computer chip giant engaged in illegal practices to dominate the market.
"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," Attorney General Andrew Cuomo said in a statement.
"Intel's actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices," Cuomo said.
"These illegal tactics must stop and competition must be restored to this vital marketplace," he said.
Cuomo's statement said the suit accuses Intel of violating state and federal anti-monopoly laws by engaging in "a worldwide, systematic campaign of illegal conduct" in a bid to maintain a monopoly in the market for microprocessors.
The suit is the latest legal challenge for Intel, which is already being investigated by the US Federal Trade Commission and has been sued by its main rival Advanced Micro Devices (AMD) in a case expected to go to trial next year.
European Union antitrust regulators fined Intel a record 1.06 billion euros (1.45 billion dollars) in May, claiming the company abused its stranglehold on the semiconductor market to crush AMD.
Intel denied the charges and has appealed the EU ruling.
Intel spokesman Chuck Molloy also rejected the latest allegations.
"We disagree with the New York attorney general," he told AFP. "Neither consumers, who have consistently benefited from lower prices and innovation, nor justice are being served by a decision to file a case now.
"Intel will defend itself," he said.
Cuomo's statement said Intel extracted exclusive agreements from large computer makers to use Intels microprocessors in exchange for payments totaling billions of dollars.
The Santa Clara, California-based company was also accused of punishing computer makers seen to be working too closely with Intels competitors.
Retaliatory threats allegedly included cutting off payments from Intel, funding competitors, and ending joint development ventures.
To obtain exclusive agreements, Intel was accused of paying so-called "rebates" to individual computer makers of billions of dollars in some years.
"These rebates were actually just payoffs with no legitimate business purpose that Intel invented to disguise their anticompetitive nature," the statement said.
It said the lawsuit seeks to "bar further anticompetitive acts by Intel, restore lost competition, recover monetary damages suffered by New York governmental entities and consumers, and collect penalties."
Intel was accused of paying US computer maker Dell nearly two billion dollars in "rebates" in 2006.
Another US computer maker, Hewlett Packard, was allegedly paid hundreds of millions of dollars in rebates in return for an agreement to cap HPs sales of AMD-based products at five percent of its business desktop personal computers.
Computer giant IBM was allegedly paid 130 million dollars not to launch an AMD-based computer server product, according to the lawsuit which cited internal documents and e-mails.
EU regulators have been investigating Intel since it received complaints from AMD in 2000 and filed formal antitrust charges against the company in July 2007 and then again in July 2008.