NY Joins the Antitrust Effort Against Intel

FILE - In this Jan. 9, 2009 file photo, a netbook equipped with an Intel Atom processor is...

FILE - In this Jan. 9, 2009 file photo, a netbook equipped with an Intel Atom processor is demonstrated at the International Consumer Electronics Show in Las Vegas. New York's attorney general on Wednesday, Nov. 4, 2009 hit Intel Corp. with an antitrust lawsuit, claiming the company used "illegal threats and collusion" to dominate the market for computer microprocessors. (AP Photo/Jae C. Hong, file)

(AP)

The legal challenges to Intel Corp.'s sales tactics mounted Wednesday as New York's attorney general accused the world's biggest computer chip maker of using "illegal threats and collusion" to dominate.

In filing a federal antitrust lawsuit, Attorney General Andrew Cuomo accused Intel of using its market prowess to "rule with an iron fist."

Intel's chips act as the "brains" of 80 percent of the world's personal computers. Cuomo said Intel paid billions of dollars in kickbacks to computer manufacturers and retaliated against those that did too much business with Intel's competitors, namely Advanced Micro Devices Inc.

"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," Cuomo said in a written statement. "Intel's actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices."

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An Intel spokesman, Chuck Mulloy, denied the latest charges, as the company has in the past, and said Intel's sales practices were legitimate.

"We never threatened anyone," he said.

At issue are the large annual rebates Intel pays to big customers. Intel has described the rebates as simple volume discounts, but some regulators have disagreed, saying they illegally penalize Intel's customers for going with rivals' products, namely chips from AMD.

AMD has been complaining to regulators for five years that Intel has broken antitrust laws to keep AMD's market share down. The company has found its most sympathetic ear abroad.

In May, the European Union fined Intel a record $1.45 billion, and last year Korea's Fair Trade Commission fined Intel $18.6 million. Intel is appealing both rulings. In 2005, Japan's Fair Trade Commission found that Intel violated antitrust rules there. Intel accepted that ruling without admitting wrongdoing.

The U.S. Federal Trade Commission is also investigating. That probe might take on increased urgency considering the mounting charges and the Obama administration's pledge to pursue antitrust cases more vigorously than the Bush administration did.