Font ResizeSAN JOSE — On the heels of similar actions by foreign governments and private competitors, New York Attorney General Andrew Cuomo filed an antitrust lawsuit Wednesday that accused Intel Corp. of using kickbacks, threats and retaliation to dominate the worldwide semiconductor market.
Cuomo's action is the first by a U.S. official since the latest round of complaints and investigations were launched against the Santa Clara company. And while Intel described the charges as a rehash of old claims, legal experts said the case could be a major new headache for the world's largest chip-maker.
"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," Cuomo said as he announced his office had filed an 83-page federal lawsuit, which accuses Intel of pressuring major computer-makers such as Dell, Hewlett-Packard and IBM to use components made by Intel instead of competing chips from Advanced Micro Devices.
Intel immediately denied the charges, as it has disputed similar allegations raised by AMD and European antitrust regulators.
Intel is currently appealing a $1.45 billion fine by the European Commission, which earlier this year upheld a complaint filed by Intel rival Advanced Micro Devices. AMD is also suing Intel in civil court. The Federal Trade Commission, which settled an earlier case against Intel in 1999, launched a new investigation last year but has not announced any action.
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Mulloy said the company will argue, as it has before, that the company used legitimate tactics such as offering discounts for volume purchases. While the New York lawsuit cites e-mails in which executives at other companies described what appears to be threats or retaliation from Intel, Mulloy said the suit ignored evidence that shows Intel did not actually impose undue pressure on other companies.
The fact that chip prices have fallen as new products and innovations have been introduced is proof that Intel is not unfairly dominating the market, he added.
Antitrust experts said it appears Cuomo's action relies heavily on evidence already uncovered by European officials and AMD. But they also said New York's entry into the fray could change the dynamics for Intel.
"They have one of the most sophisticated antitrust enforcement offices of any state," said David Balto, a Washington, D.C., attorney who previously worked on antitrust matters for the U.S. Justice Department and the FTC. Noting that New York took a lead role in actions against Microsoft and other companies, Balto said, "They bring a huge amount of expertise to this."
As a government agency, Cuomo's office is likely to seek court orders that could restrict Intel's business practices, particularly in the United States, added Evan Stewart, a veteran antitrust attorney with the New York firm of Zuckerman Spaeder.
Experts said the cases brought by European regulators and private competitors such as AMD are more likely to focus on imposing monetary damages or financial penalties or restricting Intel's practice in other countries.
And in the court of public opinion, experts said, it may be more difficult for Intel to dismiss the allegations as simply the whinings of a less successful competitor, when the charges are coming from a law enforcement agency here in the United States.
Intel, however, signaled it will mount an aggressive defense. Mulloy, the company spokesman, said Intel expects to prevail when AMD's lawsuit comes to trial early next year, and he predicted that will leave Cuomo with no legal basis for continuing his case.
Cuomo, however, said his office can show Intel's actions caused harm to consumers by creating higher prices and fewer choices. He said his office filed suit after an investigation that began in January 2008, which included a review of millions of pages of documents and e-mails from Intel and computer makers such as Hewlett-Packard, Dell and IBM.
Brandon Bailey may also be reached at 408-920-5022.
