AMD takes Intel to court over 'illegal acts'

AMD announced today that it has filed an antitrust complaint against Intel, accusing its arch rival of "worldwide coercion" of computer makers and "illegal acts" that continue to inflate PC prices and stifle competition.

The action was filed in the US federal district court for the district of Delaware under Section 2 of the Sherman Antitrust Act, Sections 4 and 16 of the Clayton Act, and the California Business and Professions Code.

The 48-page complaint claims that Intel has "unlawfully maintained its monopoly in the x86 microprocessor market by engaging in worldwide coercion of customers from dealing with AMD".

AMD goes on to identify 38 companies which it believes have been victims of coercion by Intel, including large scale computer makers, small system builders, wholesale distributors and retailers.

These firms have been subjected to "seven types of illegality across three continents", AMD alleged.

According to the complaint, Intel has forced major customers such as Dell, Sony, Toshiba, Gateway and Hitachi into Intel-exclusive deals in return for outright cash payments, discriminatory pricing or marketing subsidies which were "conditioned on the exclusion of AMD" .

In addition AMD alleges that Intel "forced other major customers" including NEC, Acer and Fujitsu into partial exclusivity agreements by conditioning rebates, allowances and market development funds based on their agreement to severely limit or entirely forego purchases from AMD.

AMD also claimed that, when AMD succeeded in getting on the HP retail roadmap for mobile computers, Intel responded by withholding HP's fourth-quarter 2004 rebate cheque.

The charges further allege that then Compaq chief executive Michael Capellas said in 2000 that, because of the volume of business given to AMD, Intel withheld delivery of critical server chips.

Stating that "he had a gun to his head", Capellas allegedly told AMD that he had to stop buying its processors.

Craig Barrett, Intel chief executive at the time, is also accused of threatening Acer's chairman with "severe consequences" for supporting the AMD Athlon 64 launch.

This was alleged to have coincided with an "unexplained delay" by Intel in providing $15m-$20m in market development funds owed to Acer. Acer subsequently withdrew from the Athlon 64 launch in September 2003.

"Everywhere in the world, customers deserve freedom of choice and the benefits of innovation, and these are being stolen away in the microprocessor market," said Hector Ruiz, president, chief executive and chairman at AMD.

"Whether through higher prices from monopoly profits, fewer choices in the marketplace or barriers to innovation, people from Osaka to Frankfurt to Chicago pay the price in cash every day for Intel's monopoly abuses."

The AMD litigation follows a recent ruling from the Fair Trade Commission of Japan which found that Intel abused its monopoly power to exclude fair and open competition, violating Section 3 of Japan's Antimonopoly Act.

These findings, AMD claimed, reveal that Intel "deliberately engaged in illegal business practices" to stop AMD's increasing market share by imposing limitations on Japanese PC manufacturers.

The European Commission has stated that it is pursuing an investigation against Intel for similar possible antitrust violations, and is co-operating with the Japanese authorities.

"You don't have to take our word for it when it comes to Intel's abuses; the Japanese government condemned Intel for its exclusionary and illegal misconduct, " said Thomas McCoy, AMD executive vice president, legal affairs, and chief administrative officer.

The full text of the complaint can be viewed in an open letter from Hector Ruiz.