SAN FRANCISCO New York Attorney General Andrew Cuomo Wednesday (Nov. 4) filed a federal antitrust lawsuit against Intel Corp., alleging that the world's No. 1 chip maker violated state and federal anti-monopoly laws.
In a statement released by Cuomo's office, the state attorney general alleges that Intel (Santa Clara, Calif.) engaged in a worldwide, systematic campaign "in order to maintain its monopoly power and prices in the market for microprocessors." The suit includes e-mail correspondence that Cuomo's office maintains demonstrates illegal behavior on the part of Intel.
The suit seeks to bar anticompetitive acts by Intel, restore lost competition, recover unspecified monetary damages suffered by New York government entities and consumers and collect penalties, according to the statement.
Intel did not immediately respond to a request for comment on the suit. A Wall Street Journal story quotes an Intel spokesperson saying the company disagrees with Cuomo and that the company would defend itself.
In May, Intel was fined $1.45 billion by the European Commission (EC) over anticompetitive practices. The EC in September released a 518-page report detailing emails, internal presentations and testimony from PC makers Acer, Dell, Hewlett-Packard, Lenovo and NEC about Intel's discounts and rebates that were seen as efforts to stop the companies from using competing products from Advanced Micro Devices (AMD). The report alleged Intel paid PC makers to delay or limit distribution of AMD-based products.
Intel is appealing the EC's finding.
Intel, which dominates the worldwide microprocessor market, has repeatedly been a target of accusations of anticompetitive behavior, including by the governments of South Korea in 2008 and Japan in 2005. Intel in 1999 settled an antitrust case with the U.S. government the day before it was scheduled to go to trial at the U.S. Federal Trade Commission.
N.Y. Attorney General
Cuomo charges that Intel over the last several years has extracted exclusive agreements from large computer makers in which they agreed to use Intel's microprocessors in exchange for payments totaling billions of dollars. Intel also punished PC makers that it perceived to be working too closely with Intel's competitors, according to the lawsuit.
Retaliatory threats included cutting off payments the computer maker was receiving from Intel, directly funding a computer maker's competitors and ending joint development ventures, the suit charges.
"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," Cuomo said in the statement.
Among the allegations detailed in Cuomo's complaint are that Intel paid Dell almost $2 billion in rebates in 2006, paid IBM $130 million not to launch an AMD-based server product and threatened HP that it would derail development of a server technology on which HP's future business depended if HP promoted products from AMD.
Predictability, AMD supported the move by the New York attorney general . Tom McCoy, AMD's executive vice president for legal, corporate and public affairs, said in a statement circulated by a spokesperson that Cuomo's 83-page complaint "details explicit evidence" of harm inflicted by Intel on U.S. consumers and PC makers.
"Stopping that illegal harm will serve the settled purpose of the American antitrust laws: ensuring that innovation is unconstrained and competition is free to serve consumers," McCoy said.
Meanwhile, analysts at the Competitive Enterprise Institute (CEI), a Washington-based conservative think tank, criticized the suit, saying Cuomo was using it to make headlines at taxpayers' expense. "Intel's pricing and rebate policies are legitimate, pro-consumer business practices in a vibrant market setting," said Wayne Crews, CEI's vice president for policy, in a statement circulated Wednesday.