Antitrust case accuses chipmaker of "bribery and coercion"

Intel hit with federal lawsuit

Intel is facing a federal lawsuit that accuses the company of engaging in a “worldwide, systematic campaign of illegal conduct” to maintain its monopoly of the microprocessor market.

New York Attorney General Andrew Cuomo alleges that Intel bribed and threatened computer manufacturers including Dell, Hewlett-Packard and IBM in exchange for exclusive contracts over rival chipmaker AMD.

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

Cuomo’s statement said the alleged “campaign of illegal conduct”, in which the chipmaker paid “hundreds of millions of dollars annually – and in some years billions of dollars – in so-called ‘rebates’” was revealed in internal documents and emails.

“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 statement said.

According to Cuomo, “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.”

The lawsuit is the result of an investigation Cuomo began in January 2008. As part of the investigation, the Attorney General’s office has reviewed millions of pages of documents and emails and spoken to dozens of witnesses.

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