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NY files antitrust suit against chip maker Intel

November 05, 2009|David Sarno

New York Atty. Gen. Andrew Cuomo on Wednesday filed a federal antitrust lawsuit against Intel Corp., the world's largest chip maker, alleging that the company engaged in "a worldwide, systematic campaign of illegal conduct" to maintain its dominance and stifle competition.

The lawsuit, the result of a nearly two-year investigation by Cuomo's office, is the latest in a long series of antitrust actions against Intel, including suits from competitors and from federal and international regulators. Most recently, the European Union fined the company more than $1.45 billion for antitrust violations.

Now Cuomo, a Democrat who is expected to run for governor next year, has launched yet another assault.

"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," 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."

Cuomo's office maintained that Intel paid or threatened some of the world's leading computer makers -- Dell, Hewlett-Packard and IBM among them -- in an effort to prevent the companies from doing business with Intel's main rival, Advanced Micro Devices Inc.

The payments, the complaint alleges, came in the form of high-dollar "volume rebates" to the computer makers, though Cuomo's office dismissed the rebates as "payoffs."

Antitrust experts said the move could draw more attention to Intel from federal regulators, who under President Obama may be more receptive to cases against dominant firms.

"This is a major American corporation with a global reach," said Jeffrey Shinder, an antitrust attorney at the law firm Constantine Cannon. "A major state stepping into that domain could motivate Washington to take some action."

The case was assembled in part from internal e-mails collected from Intel's business partners and from within the company itself, according to the filing.

Intel questioned the timing of the suit, six months before a lawsuit filed against it by AMD is to go to trial. Intel has said that could resolve many of the issues raised by Cuomo. "In our view, neither consumers . . . nor justice are being served by this filing today," said Intel spokesman Tom Beermann.


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