NY AG Hits Intel With Antitrust Suit
New York Attorney General Andrew Cuomo filed a federal antitrust lawsuit Wednesday, against Intel, the world’s largest maker of computer chips.
The suit says Intel violated state and federal anti-monopoly laws by engaging in a global campaign of illegal conduct revealed in emails, in order to maintain its monopoly power and prices in the market for chips.
Over the last several years, Intel has landed exclusive agreements from large computer makers in which they agreed to use Intel’s chips in exchange for payments totaling billions of dollars. Intel also threatened and punished computer makers that they thought were working too closely with Intel competitors. Threats included cutting off payments the computer maker was receiving from Intel, directly funding a computer maker’s rivals, and ending joint development ventures.
"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," said Attorney General Cuomo.
"Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices. These illegal tactics must stop and competition must be restored to this vital marketplace."
To secure exclusive agreements, Intel paid hundreds of million dollars in "rebates" to individual computer makers. The payments for exclusivity that Intel provided could make the difference between profit and loss for a computer maker.
The suit alleges Intel’s behavior was detrimental to consumers and to the entire marketplace for computers. Intel repeatedly pressured computer makers to guarantee it specified market share of their sales, which prevent computer makers from responding to consumer demand. With more competition, consumers would have had more choices, lower prices and better products.
The suit seeks to bar further anticompetitive acts by Intel, restore lost competition, recover monetary damagessuffered by consumers and the government, and collect penalties.
In May, the European Commission fined Intel a record $1.45 billion for violating antitrust rules and other practices used to exclude competitor AMD from the computer chip market. Intel is planning to appeal the fine.