NY attorney general v. Intel: tougher antitrust stance in US?

The New York attorney general's suit against Intel may signal a tougher stance against antitrust violations in the US.

The antitrust charges against Intel aren't particularly new, but the fact that they have been filed in the United States is.

For the first time in years, a US government entity – in this case, the New York attorney general – has charged the computer-chip giant with unfair practices that squeeze out the competition. The move adds weight to the barrage of charges Intel has faced overseas and in US courts.

Will the US Federal Trade Commission, which has also been investigating the company, follow suit? If so, it would signal a tougher stance on antitrust violations in the United States.

In its suit filed Wednesday, New York Attorney General Andrew Cuomo said in a statement that Intel "used bribery and coercion to maintain a stranglehold on the market."

The company paid hundreds of millions a year in "rebates" – actually payoffs – to computer companies so that they would use Intel chips exclusively, the suit alleges. "Sometime, the payments from Intel exceeded a company's reported quarterly net income."

The suit, filed in federal court, quoted e-mails purporting to show how Hewlett Packard, Dell, and IBM executives feared Intel would punish their companies if they used chips from rival A.M.D.

“I understand the point about the accounts wanting a full AMD portfolio," an IBM executive wrote in January 2005. "The question is, can we afford to accept the wrath of Intel…?”

“Intel has told us that HP’s announcement on Opteron [A.M.D.’s server chip] has cost them several $B [billions] and they plan to ‘punish’ HP for doing this,” an HP executive wrote in June 2004.

The e-mails are similar in tone to those released in September by the European Commission. The EC fined Intel $1.45 billion in May for breaking antitrust rules. Intel has appealed that decision, claiming that the commission ignored or misinterpreted the evidence.

Japanese and South Korean commissions have also ruled that the chipmaker violated antitrust rules. Early next year, a US case filed against Intel by A.M.D. is scheduled to go to trial.

Intel said it would defend itself in the case filed Wednesday.