AMD Files Antitrust Complaint Against Intel, Alleges Worldwide Coercion of Customers

Strategic Insights -

AMD filed an antitrust complaint against Intel in the U.S. federal district court for the district of Delaware, alleging that Intel has engaged in worldwide coercion of customers from dealing with AMD, inflating computer prices and limiting choices for businesses and consumers. The 48-page complaint details Intel's alleged illegal acts, including forcing major customers into Intel-exclusive deals, conditioning rebates and market development funds on the exclusion of AMD, and establishing a system of discriminatory and retroactive incentives to deny customers the freedom to purchase AMD processors.

Key Takeaways:

  • AMD's complaint alleges that Intel has unlawfully maintained its monopoly in the x86 microprocessor market by engaging in worldwide coercion of customers from dealing with AMD.
  • 38 companies, including large-scale computer-makers, small system-builders, wholesale distributors, and retailers, have been victims of coercion by Intel.
  • Intel's share of the critical x86 microprocessor market currently counts for about 80 percent of worldwide sales by unit volume and 90 percent by revenue.
  • Intel has been accused of forcing major customers, such as Dell, Sony, Toshiba, Gateway, and Hitachi, into Intel-exclusive deals in return for outright cash payments, discriminatory pricing or marketing subsidies conditioned on the exclusion of AMD.
  • Intel has allegedly paid millions of dollars to Dell, Toshiba, and Sony to exclude AMD from their business.
  • AMD's complaint also alleges that Intel has forced system-builders into partial exclusivity agreements, conditioned rebates, allowances, and market development funds on customers' agreement to severely limit or forego entirely purchases from AMD.
  • Intel has been accused of establishing a system of discriminatory and retroactive incentives triggered by purchases at high levels, denying customers the freedom to purchase any significant volume of processors from AMD.
  • AMD's complaint includes specific examples of Intel's alleged coercion, including a case where Intel threatened Acer executives with "severe consequences" for supporting the AMD Athlon 64 launch.
  • AMD has also accused Intel of abusing its market power by forcing on the industry technical standards and products that have as their main purpose the handicapping of AMD in the marketplace.
  • Intel's compilers were allegedly designed to degrade a program's performance if operated on a computer powered by an AMD microprocessor.

Statistics:

  • AMD's complaint alleges that Intel has a 90% market share of the x86 microprocessor market by revenue and 80% by unit volume.
  • Intel has allegedly paid millions of dollars to major customers, such as Dell and Toshiba, to exclude AMD from their business.
  • AMD's complaint alleges that Intel has established a system of discriminatory and retroactive incentives triggered by purchases at high levels.
  • 38 companies have been victims of coercion by Intel, including large-scale computer-makers, small system-builders, wholesale distributors, and retailers.

Sources:

  • Business Wire, "AMD Files Antitrust Complaint Against Intel, Alleges Worldwide Coercion of Customers," June 28, 2005
  • AMD, "Complaint for Damages and Injunctive Relief," filed in the U.S. federal district court for the district of Delaware, June 27, 2005
  • The Wall Street Journal
  • The Washington Post
  • The Economist
  • San Jose Mercury News
  • CNET
  • AMD website, www.amd.com