Intel antitrust suit filed in New York

New York state's attorney general has sued Intel on much the same antitrust grounds that got the chip-making giant into hot water in Asia and Europe.

Andrew Quomo, New York's attorney general, accused Intel of essentially bribing computer makers into doing most of their business with Intel, and not with competitor AMD. Regulators in other countries have said that Intel offered lucrative deals to these companies in exchange for limiting the percentage of products that use AMD's microprocessors.

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“Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices," Quomo said in a statement. Intel, of course, denies the charges and plans to contest the lawsuit.

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In Europe, things got nasty recently when the European Commission revealed internal communications from Dell, HP and Lenovo, speaking of deals that prevented the companies from doing more business with AMD. "“Late last week Lenovo cut a lucrative deal with Intel,” said an internal e-mail from a Lenovo executive in December 2006. “As a result of this, we will not be introducing AMD-based products in 2007 for our Notebook products.”

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Intel dismissed those communications as speculation from "lower level employees." The European Commission's ruling, which fined Intel $1.45 billion, is being appealed. Cuomo claims to have even more evidence against Intel, according to the New York Times, including cases of server chip monopolies, not just PC processors. In one such case, an e-mail from an IBM executive asks, "The question is, can we afford to accept the wrath of Intel?"

Speaking to the Times, a source said the lawsuit is unlikely to go forward on its own. Instead, Cuomo's actions will put pressure on the Federal Trade Commission to launch its own formal proceedings against Intel. The FTC has been investigating, but has yet to take action.

The case could come down to how the U.S. courts treat so-called "loyalty pricing," which awards manufacturers with better deals in exchange for more of their business. One expert, NYU law professor Harry First, told the Times that Europe is much harsher on these kinds of deals. Mr. First said that the Supreme Court has yet to rule on loyalty pricing, so it could be a very long time before the Intel case comes to resolution in the United States.

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