New York launches antitrust investigation into Intel

The investigators allege that Intel spent billions of dollars to bribe chip manufacturers into using its hardware over that of rivals such as AMD. Furthermore the suit alleges that Intel punished computer manufacturers who did use competing products.

“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.”

Cuomo says that the investigation will focus on the use of rebates goven to computer manufacturers using Intel processors. He claims to have internal company emails from HP, IBM and Dell to back up his case.

“PSO/CRB [Intel CEO Paul Ottelini and Intel Chairman Craig Barrett] are prepared for jihad if Dell joins the AMD exodus,” reads one email from Dell in February 2004, according to the complaint.

“We [will] get ZERO [rebates] for at least one quarter while Intel ‘investigates the details’ - there’s no legal/moral/threatening means for us to apply and avoid this.”

The complaint alleges that Dell alone received almost $2bn in rebate payments in 2006 alone and received a privileged position at Intel above other computer manufacturers for its support of Intel.

“The New York Attorney General’s 83-page complaint, filed on behalf of New York State consumers and governmental entities, details explicit evidence of Intel’s harm to U.S. consumers and computer manufacturers,” said Tom McCoy, AMD executive vice president of Legal, Corporate and Public Affairs.

“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.”

However, the investigation has been criticised by libertarian think tank the Competitive Enterprise Institute.

“Mr. Cuomo’s suit is just the latest example of the New York Attorney General using his authority to make headlines at consumers’ expense. This baseless attack against Intel will only delay innovation in the computer chip market,” argued Ryan Radia, associate director of Technology Studies at.

“Mr. Cuomo’s suit rests on the fundamentally flawed assumption that Intel’s high market share is indicative of market control. In fact, Intel and archrival AMD have been competing fiercely for over a decade, and both firms continue to invest billions of dollars each year in researching and developing faster, more efficient chips.”

Intel is already facing record fines after an investigation by the EU on similar charges and the US FTC is also considering action.