Cuomo Files Antitrust Suit Against Intel

New York's Attorney General says Intel's rebates to server manufacturers are illegal. Intel says the Attorney General "has swallowed the complaints AMD has been shopping to regulators around the world for more than ten years."

New York Attorney General Andrew Cuomo yesterday filed a federal antitrust lawsuit against Intel, charging that the chipmaker violated state and federal anti-monopoly laws by engaging in illegal conduct (such as rebates and threats). The suit repeats many of the allegations put forth by European regulators earlier this year, which culminated in Intel being charged a $1.56 billion fine. Cuomo's case is built largely upon internal emails between executives at Intel, HP, IBM and Dell.

Intel's response yesterday was: "We disagree with the NYAG. Neither consumers, who have consistently benefited from lower prices and increased innovation, nor justice are being served by the decision to file a case now. Intel will defend itself."

At the heart of the case are the rebates Intel pays computer manufacturers that use its chips, which the Attorney General says total billions of dollars.

Intel executives, however, say that "rebates are simply another form of discounting and are vitally important. The Attorney General and AMD for that matter are mischaracterizing them," says corporate spokesman Chuck Mulloy. "The Attorney General has swallowed the complaints that AMD has been shopping to regulators around the world for more than ten years."

Cuomo's office cites several emails between Intel, HP, Dell and IBM executives to make its case. Examples include:

* Internal e-mail from IBM executive in January 2005: "I understand the point about the accounts wanting a full AMD portfolio. The question is, can we afford to accept the wrath of Intel?"

* Internal e-mail from HP executive in June 2004 after HP defied Intel and launched an AMD product: "Intel has told us that HP's announcement on Opteron [AMD's server chip] has cost them several $B [Billions] and they plan to 'punish' HP for doing this."

* Internal e-mail from HP executive in September 2004 regarding the consequences of marketing products from an Intel competitor: "If you do and we get caught (and we will) the Intel moneys (each month is gone (they would terminate the deal). The risk is too high. Without the money we do not make it financially."

The Attorney General's office did not say why this suit is being brought now, more than four years after the alleged illegal behavior. It began its investigation in January 2008.