Intel Sued for Antitrust Violations by New York Attorney General

New York State Attorney General Andrew Cuomo has filed an antitrust lawsuit against chipmaking giant Intel Corporation, alleging the company abused its dominant position in the market to squeeze out rival chipmaker AMD. The suit (PDF) charges that Intel violated both state and federal antitrust statutes by offering computer makers rebates if they used Intel chips instead of rivals…and punished computer makers that Intel felt were getting too cosy with its rivals.

NY AG Andrew Cuomo

“Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market,” said New York Attorney General Andrew Cuomo, 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. These illegal tactics must stop and competition must be restored to this vital marketplace.”

Intel is accused of issuing payoffs to computer makers—terms “rebates”—that in some cases totaled billions of dollars a year in order to lock computer makers into exclusive agreements and guarantee Intel chips were in pre-determined shares of the makers’ overall sales. The suit alleges that Intel threatened and coerced computer makers like IBM, Dell, and HP, and that internal documents and email messages demonstrate Intel trying to hide its illegal activities.

The accusations are very similar those specified in the European Union’s recent record antitrust ruling against Intel; industry watchers speculate that the U.S. Federal Trade Commission is preparing its own antitrust case against Intel. Rival chipmaker AMD has been alleging for years that Intel used illegal practices to squeeze it out of the CPU market, and litigation on its complaints is still pending.

Intel has not commented on the New York state lawsuit, but in the past has staunchly defended its practices, maintaining that it has done nothing wrong and that programs like its rebates to manufacturers ultimately benefitted consumers by lowering prices. Intel is also appealing the European Union antitrust ruling.