Cuomo files antitrust lawsuit against Intel (UPDATED) | FT Alphaville

Cuomo files antitrust lawsuit against Intel (UPDATED)

New York attorney general Andrew Cuomo filed a federal antitrust lawsuit against Intel on Wednesday. The suit comes after an investigation into the world’s largest chipmaker that started in January 2008.

Here are extracts from the (detailed) statement issued by the attorney general’s office on Wednesday:

NEW YORK, NY (November 4, 2009) – Attorney General Andrew M. Cuomo today filed a federal antitrust lawsuit against Intel Corporation (NASDAQ: INTC), the world’s largest maker of computer microprocessors. The suit charges that Intel violated state and federal anti-monopoly laws by engaging in a worldwide, systematic campaign of illegal conduct – revealed in e-mails – in order to maintain its monopoly power and prices in the market for microprocessors.

Over the last several years, Intel has extracted exclusive agreements from large computer makers in which they agreed to use Intel’s microprocessors in exchange for payments totaling billions of dollars. Intel also threatened to and did in fact punish computer makers that they perceived to be working too closely with Intel’s competitors. Retaliatory threats included cutting off payments the computer maker was receiving from Intel, directly funding a computer maker’s competitors, and ending joint development ventures.

Cuomo has accused the chipmaker of “using bribery and coercion to maintain a strangehold on the market.”

To obtain exclusive agreements, Intel paid hundreds of millions of dollars annually – and in some years billions of dollars – in so-called “rebates” to individual computer makers. These rebates were actually just payoffs with no legitimate business purpose that Intel invented to disguise their anticompetitive nature. Intel also attempted to erase the most obvious traces of its anticompetitive scheme by eliminating crucial but flagrantly objectionable provisions from written agreements or by camouflaging language about illegal guaranteed market shares with terms like “volume targets.”

The full complaint, which includes extracts of the “millions of pages of documents and emails” reviewed by Cuomo and his team, is available as a PDF.

UPDATE: Intel offered FT Alphaville the following response:

“We disagree with the New York AG. Neither consumers – who have consistently benfitted from lower prices and increased innovation – nor justice are being served by filing a case now. Intel will defend itself.”

(As an aside, we tip our hats to the incredibly prolific reporters at the New York  Times, who somehow managed to write up and publish 1,300 words on the lawsuit within minutes of the 11am ET announcement. Amazing.)

Related links:
Top ten Intel corporate slogans –
Intel, we are rock stars – Engadget (video)
Intel earnings beat Wall Street forecasts – FT
Galleon ‘had Intel insider since 1998′ – FT