N.Y. Prosecutors File Antitrust Suit Against Intel

Federal prosecutors in New York have filed an antitrust lawsuit against Intel, leveling charges that echo those of European regulators, who eventually fined the giant chip maker $1.45 billion earlier this year.

The lawsuit, filed Nov. 4, accuses Intel of leveraging its monopoly position in the global processor market to cajole and threaten systems makers into using Intel processors and staying away from products from rival Advanced Micro Devices.

N.Y. Attorney General Andrew Cuomo’s lawsuit—which accuses Intel of breaking state and federal anti-monopoly laws—alleges that Intel paid billions of dollars to Dell, Hewlett-Packard and IBM to use Intel products at the expense of AMD and threatened those OEMs if they didn’t comply.

“Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market,” 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. These illegal tactics must stop and competition must be restored to this vital marketplace.”

The 83-page lawsuit is asking the federal court to ban Intel from continuing such practices, force the chip maker to pay damages to N.Y. residents and government entities, and level penalties against Intel.

The charges are similar to those leveled by investigators with the European Commission—the antitrust arm of the European Commission—who also found that Intel offered rebates and made direct payments to such systems makers as Acer, Dell, HP and NEC to buy all or mostly Intel products for their machines. Intel, which owns about 80 percent of the world’s x86 processor market, also coerced these companies into favoring the chip maker, the EC said.

Intel has appealed the EC’s fine, and officials have been vocal in accusing European investigators of conducting a one-sided investigation and ignoring evidence that is positive to Intel and its case. They also argued that consumers have benefited by Intel's practices through greater innovation and lower prices.

At the Intel Developer Forum in September, Intel CEO Paul Otellini reiterated that argument and denied allegations of conditional rebates or exclusive deals.

"I think they have consistently ignored information that would paint an entirely different picture around the memos" from OEMs that the EC unveiled Sept. 21, Otellini said at IDF.

Regarding the N.Y. case, Intel spokesman Tom Beermann said the company disagrees with Cuomo’s decision to file the lawsuit, particularly given that Intel and AMD are locked in court proceedings over a lawsuit filed by AMD in Delaware that essentially addresses the same allegations and similar evidence.

Both Intel and AMD have spent hundreds of millions of dollars, filed hundreds of pages of evidence and conducted 2,200 hours of depositions in connection with the AMD lawsuit. It doesn’t benefit either company or consumers to have another lawsuit filed to go over the same issues, Beermann said.

“The same tired line of thinking that AMD has been shopping to regulators around the world has been picked up by the Attorney General’s Office in New York,” he said.