New York Attorney General sues Intel for antitrust violations

While Microsoft went down in flames on antitrust issues long ago, Intel had until recently escaped the ire of government regulators. But today, the New York Attorney General filed an antitrust suit against the world’s biggest chip maker.

The lawsuit echoes allegations made by the European Union, which in May levied a $1.45 billion fine against Intel for setting up deals with PC makers and retailers that excluded its main competitor, Advanced Micro Devices, from getting market access. Such actions happen all the time, but companies with monopoly power aren’t allowed to throw their weight around like this under antitrust laws.

“Intel has engaged in a systematic worldwide campaign of illegal, exclusionary
conduct to maintain its monopoly power and prices in the market for x86 microprocessors, the
‘brains’ of PCs,” the lawsuit by New York attorney general Andrew Cuomo says. “By exacting exclusive or near-exclusive agreements from large computer makers, in exchange for payments totaling billions of dollars, and threatening retaliation against any company that did not heed its wishes, Intel robbed its competitors of the opportunity to challenge Intel’s dominance in key segments of the market. This illegal behavior was highly detrimental to consumers, competition, and innovation.”

The suit was filed in federal court in Delaware. A lot of the allegations mirror the evidence released by the EU in September. Intel has denied wrongdoing in the EU case and is appealing. It argues that it gives incentives that leave PC makers with plenty of choice and that its actions have led to constantly falling prices for consumers. AMD argues that Intel is essentially paying customers not to use AMD, which has about a fifth of the PC microprocessor market.

In a statement, AMD executive vice president Tom McCoy said, “The New York Attorney General’s 83-page complaint details explicit evidence of Intel’s harm to U.S. consumers and computer manufacturers. 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.”

Intel hasn’t commented yet. The New York lawsuit is filed on behalf of New York consumers. It is one more headache for Intel, which faces a Federal Trade Commission investigation as well a big private antitrust lawsuit from AMD.

[Update: Tom Beermann, an Intel spokesman, said, “We disagree with the decision to file suit in the matter. This covers the same ground we have been dealing with in the private litigation with AMD since 2005. Since that time, both companies have spent hundreds of millions of dollars and given 2,200 hours of depositions in that matter. It raises the question that, when that trial is set to begin in six months, why now? Neither consumers, who have benefited from innovation and low prices, nor justice are being served by the decision to file a case now.”

He added, “Much of it does appear to cover the same territory and same tired arguments that AMD has been putting forth for the past 4.5 years.”]