New York Sues Intel for Antitrust Crimes of ‘Bribery and Coercion’

November 4, 2009

(ChattahBox)–New York Attorney General Andrew Cuomo, filed an antitrust suit against Intel Corp. in U.S. District Court in Wilmington, Delaware today, to put a stop to the chipmaker’s alleged reign of terror against computer manufacturers, illegally forcing them to use Intel’s chips. The world’s largest computer chipmaker is accused of making billions of dollars of illegal payments to companies, to ensure they would not do business with Intel’s competitors, such as Advanced Micro Devices Inc.

The antitrust suit seeks to end Intel’s anti-competitive business practices, restore competition to the marketplace and to recover damages suffered by New York government agencies and consumers, as well as impose stiff penalties against the chipmaker.

Attorney General Cuomo claims Intel pressured computer makers to agree to use its chips in exchange for payments disguised, as “rebates” and threatened and punished manufacturers that worked with Intel’s competitors.

In a statement, Cuomo cited a series of internal emails, which he says prove that Intel resorted to bribery and coercion to retain its dominance in the chip market. “Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market. Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices,” said Cuomo.

The internal emails show “rebate” coercion allegedly used against such manufacturers, as Dell, Hewlett-Packard Co. and International Business Machines Corp. Intel would threaten to cut off the rebate payments and would at times, further threaten to fund the manufacturers’ competitors and end joint ventures, according to the attorney general.

Intel paid Dell almost $2 billion in so-called rebates in 2006. During just two quarters of 2006, the rebate payments exceeded Dell’s reported net income, Cuomo said.

An internal Dell email, alluding to ending its exclusive relationships with Intel, noted that Intel Chief Executive Officer Paul Otellini and then- chairman Craig Barrett, “are prepared for jihad if Dell joins the AMD exodus.”

Hewlett-Packard decided to purchase some AMD chips in 2004 and noted in an internal email that Intel threatened “to ‘punish’ HP.”

Intel has already been fined stiff penalties for antitrust violations in both Europe and Asia. Advanced Micro Devices Inc. originally filed the antitrust complaint with the European Union.

Intel spokesman, Chuck Mulloy, said the chipmaker plans to fight the suit.

In the wake of the EU and Asian antitrust complaints against Intel and now the suit filed by the State of New York, the Federal Trade Commission is expected to launch a suit of its own soon.



One Response to “New York Sues Intel for Antitrust Crimes of ‘Bribery and Coercion’”

  1. allrise on November 5th, 2009 7:45 am

    The State of New York VS. Intel case is now online in AllRise community court. Join the debate and cast your vote

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