Intel offside, antitrust lawsuit claims

New York Attorney General Andrew Cuomo has filed an antitrust action against computer chip maker Intel Corp.

'Used bribery and coercion'

New York Attorney General Andrew Cuomo has filed an antitrust lawsuit against Intel Corp., the world's largest maker of computer chips.

The action alleges that Intel abused its market position to the detriment of Advanced Micro Devices Inc. and other rivals.

The suit says that over the last several years Intel has extracted exclusive arrangements from large computer makers which agreed to use Intel microprocessors in exchange for payments totalling billions of dollars.

Intel also threatened to — and did — punish computer makers it perceived as working too closely with its competitors, the attorney general's office said.

The lawsuit includes e-mail correspondence which it says demonstrates Intel’s alleged illegal activities.

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

"Intel’s actions not only unfairly restricted potential competitors, but also 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."

Billions in 'rebates'

To obtain exclusive agreements, the suit alleges, Intel paid billions in so-called "rebates" to individual computer makers. These rebates were actually just payoffs that Intel invented to disguise their anticompetitive nature, the suit reads.

Intel’s x86 microprocessors — the "brains" of most personal computers — are usually sold as components to computer makers, as opposed to the general public. Intel sales to IBM, Dell and Hewlett-Packard are swept up in the probe. The suit alleges that Intel paid Dell more than $2 billion US in 2006 — more than the computer maker's profit for the year.

Intel did not immediately comment.

In May, the European Union imposed a record fine of $1.45 billion on Intel for numerous antitrust violations.