New York State Attorney General Files Antitrust Lawsuit Against Intel

New York State Attorney General Andrew Cuomo has filed a federal antitrust lawsuit against Intel, accusing the company of engaging in a "worldwide, systematic campaign of illegal conduct" to maintain its monopoly power and prices on microprocessors. The lawsuit claims that Intel used bribery and coercion to maintain its stranglehold on the market, and that the company's actions resulted in consumers being robbed of better products and lower prices, and hindered innovation. The suit also accuses Intel of threatening and punishing OEMs perceived to be working too closely with AMD.

Key Takeaways:

• The lawsuit, filed in district court in Delaware, mirrors the charges made in the AMD suit and in the AMD-inspired European Commission's recent antitrust finding that cost Intel $1.4 billion, the largest fine ever levied by the EC.
• The suit claims that Intel paid OEMs billions of dollars in the form of "so-called rebates" in exchange for exclusive agreements with the computer makers that locked AMD out.
• The 84-page Cuomo complaint claims that Intel attempted to erase the most obvious traces of its anticompetitive scheme by eliminating crucial provisions from written agreements or by camouflaging language about illegal guaranteed market shares.
• The complaint relies heavily on internal e-mails from Intel negotiators and executives, including an e-mail from an Intel negotiator in September 2006 reading, "Could you just take the mss [market share] references off and just leave everything at volume targets."
• The suit also accuses Intel of threatening and punishing OEMs perceived to be working too closely with AMD, including cutting off payments, directly funding competitors, and ending joint development ventures.
• Intel allegedly paid HP $925 million to increase its shares of HP's sales at AMD's expense, and IBM $130 million not to launch an AMD-based server.
• The lawsuit seeks monetary damages suffered by New York governmental entities and consumers, and treble damages.

Statistics:

• The lawsuit claims that Intel paid OEMs billions of dollars in the form of "so-called rebates" in exchange for exclusive agreements with the computer makers.
• Intel allegedly paid HP $925 million to increase its shares of HP's sales at AMD's expense.
• Intel allegedly paid IBM $130 million not to launch an AMD-based server.
• The lawsuit relies on over 200 million pages of documents, 2,200 hours of depositions and tens of thousands of pages of expert testimony from the AMD suit.
• The suit claims that Intel's actions resulted in consumers being robbed of better products and lower prices, and hindered innovation.

Sources:

• Andrew Cuomo, New York State Attorney General, Federal Antitrust Lawsuit against Intel, filed in district court in Delaware.
• AMD, private antitrust suit against Intel, filed in June 2005.
• European Commission, antitrust finding against Intel, resulting in a $1.4 billion fine, the largest fine ever levied by the EC.