Intel faces anti-trust charges from State of New York

After a twenty-two month investigation into Intel's trading practices, the State of New York has decided to bring anti-trust charges against Intel.

After a twenty-two month investigation into Intel's trading practices, the State of New York has decided to bring anti-trust charges against Intel.

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.

The Attorney General for the State of New York, Andrew Cuomo, today filed the charge which alleges that Intel threatened computer makers and paid them kickbacks to deter them from using AMD processors.

Intel has been found guilty on similar charges by anti-trust regulators in Korea, Japan and Europe.

"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 totalling billions of dollars", says the charge.

"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." the charge added.

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

"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."

The charge continues: "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 anti-competitive nature.

"Intel also attempted to erase the most obvious traces of its anti-competitive 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 charge added: 'The payments for exclusivity that Intel provided could make the difference between profit and loss for a computer maker or a segment of its business. Sometimes, the payments from Intel exceeded a company's reported quarterly net income. Intel's illegal behaviour was highly detrimental to individual consumers and to the entire marketplace for computers."

The suit, which was filed today in federal court, seeks to bar further anti-competitive acts by Intel, restore lost competition, recover monetary damages suffered by New York governmental entities and consumers, and collect penalties.

Intel's 'illegal' actions involved  HP, Dell and IBM, alleges the New York charge sheet which highlights a $2bn rebate payment to Dell in 2006, pressure put on HP not to promote AMD products and payments made to IBM not to launch servers using its rivals products.

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