New York files anti-trust lawsuit against Intel

Intel is under attack from all sides

New York attorney general Andrew Cuomo has filed an anti-trust lawsuit against Intel, after allegations that the chip giant abused its market position.

The investigators allege that Intel spent billions of dollars bribing PC manufacturers into using its hardware over that of rivals such as AMD. The suit claims that Intel punished manufacturers that chose competing products.

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

"Intel's actions not only unfairly restricted potential competitors, but 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 said that the investigation will focus on the use of rebates given to computer manufacturers using Intel processors. He claims to have internal company emails from HP, IBM and Dell to back up his case.

One such email from Dell, sent in February 2004, says that Intel chief executive Paul Otellini and Intel chairman Craig Barrett are "prepared for jihad if Dell joins the AMD exodus. 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 received almost $2bn (£1.2bn) in rebate payments in 2006 alone, and was given a privileged position at Intel above other computer manufacturers for its support.

"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 US consumers and computer manufacturers," said Tom McCoy, AMD's executive vice president of legal, corporate and public affairs.

"Stopping that illegal harm will serve the settled purpose of the American anti-trust 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 (CEI).

"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," said Ryan Radia, associate director of technology studies at the CEI.

"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 European Union on similar charges, and the US Federal Trade Commission is also considering action.