NY Attorney General Probing Intel

New York Attorney General Andrew Cuomo has opened an investigation into Intel’s business practices and is trying to determine whether the chip maker abused its market position by forcing customers to buy its microprocessors instead of those made by Advanced Micro Devices.

The law enforcement agency announced Jan. 10 that it had issued a subpoena to Intel that seeks a wide range of documents and other information concerning the Santa Clara, Calif, company’s pricing practices. The subpoena also seeks to find if Intel attempted to exclude competition through its dominant position in the x86 chip market and intimidate customers into only buying its products.

The attorney general is looking to determine whether Intel paid its customers to excessively use its processors, penalized some PC vendors for using other chips and illegally cut its competitors off from distribution channels.

“Protecting fair and open competition in the microprocessor market is critical to New York, the United States, and the world,” Cuomo said in a statement released by his office.

“Businesses and consumers everywhere should have the ability to easily choose the best products at the best price and only fair competition can guarantee it,” Cuomo added. “Monopolistic practices are a serious concern particularly for New Yorkers who are navigating an information-intensive economy.”

Chuck Mulloy, an Intel spokesman, told eWEEK that the company had received the subpoena from the N.Y. Attorney General’s Office and would work to comply with the order. Mulloy added that Intel believes that the current processor market is fair to all companies involved.

 “We believe that our practices are lawful and we also believe that the microprocessor market is competitive and is functioning as one should expect a competitive market to behave,” Mulloy said.

Michael Silverman, an AMD spokesman, confirmed that his company, which is based in Sunnyvale, Calif., also received a subpoena based on the New York Attorney General’s investigation, but he had no additional comment at this time.

The subpoena from the attorney general’s office comes at a time when Intel is preparing to defend itself against similar charges in Europe. In July, the European Commission charged Intel with cutting prices in order to squeeze AMD out of the market.

Intel has maintained that its practices are fair and within the guidelines and laws set by the European Commission.

Intel is already involved in an ongoing lawsuit with AMD, which claims that Intel has continually engaged in anti-competitive practices in order to maintain a monopoly in the worldwide PC market. That lawsuit, which has been filed in federal court in Delaware, is expected to go to trial sometime in 2009.

Mulloy added that the N.Y. Attorney General’s case "mirrored" AMD's lawsuit.

 “The press release has some of the same allegations that mirror a private case filed by AMD in U.S. District Court in Delaware, and we have denied the allegations in that case," Mulloy said.

In addition to the AMD lawsuit and the European Commission probe, Intel’s business practices have been scrutinized in South Korea and Japan.