Intel Inside.......an anti-trust embargo
After facing lawsuits in Asia and Europe, New York’s attorney general, Andrew M. Cuomo, filed a federal antitrust lawsuit on Wednesday against Intel, the world’s largest chip maker. In May this year the European Commission fined the company a record $1.45 billion for antitrust regulations.
Intel has been charged of violating state and federal laws by abusing its market leadership in the chip market to keep Advanced Micro Devices (AMD) at bay. The charges accuse that the deals and contracts signed by Intel with retailers and computer manufacturers, pressured them to use Intel's processors in place of competing AMD products.
“Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market,” Mr. 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.”
This is the first formal antitrust action against Intel by any government agency in the United States in more than a decade.The Federal Trade Commission is also investigating Intel since 2008. The company also faces a four-year-old antitrust lawsuit filed by AMD in Delaware which is scheduled to go to trial in late March, 2010.Intel has decided to contest the New York lawsuit as it did with the EU ruling.
An Intel spokesman, Chuck Mulloy, said the company will contest the New York suit. “Neither consumers, who have consistently benefitted from lower prices and increased innovation, nor justice are being served by the decision to file a case now,” he said. “Intel will defend itself.”Intel shares were up about 1 percent, to $18.68, in midday trading Wednesday.
The complaint also names Dell as a large beneficiary of Intel's "largesse".
"In pure dollar terms, Dell was far and away the leader in receiving Intel's largess," the complaint alleges. "For example, over the four-year period from February 2002 to January 2007, it received approximately $6 billion in 'rebates.'"
The lawsuit also alleges Intel of being at the center of using coercion to force HP to use Intel products.
Intel allegedly paid hundreds of millions of dollars to Hewlett-Packard to limit its sales of AMD-based computers to five percent, threatened HP that it would derail development of an important server technology, and agreed to pay HP $925 million to increase Intel's sales at AMD's expense.
The lawsuit also states similar allegation in case of IBM.
Intel also paid IBM $130 million not to launch an AMD-based server product, threatened to pull funding for joint IBM-Intel projects, and pressured IBM to sell an AMD-based server only on an unbranded basis, the suit says.
In return, A.M.D. is dropping suits in the United States and Japan, and withdrawing complaints to antitrust regulators worldwide. In a joint statement, the companies said, “While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development.”
The chipmaker Intel agreed Thursday to pay its rival Advanced Micro Devices $1.25 billion to settle antitrust and patent disputes.Intel has agreed to abide by a set of “business practice provisions.”
In return, A.M.D. is dropping suits in the United States and Japan, and withdrawing complaints to antitrust regulators worldwide.
In a joint statement, the companies said, “While the relationship between the two companies has been difficult in the past, this agreement ends the legal disputes and enables the companies to focus all of our efforts on product innovation and development.”