N.Y. Antitrust Probe Opened Against Intel

The New York attorney general's office on Thursday launched a formal antitrust investigation against Intel, looking into whether the world's largest chipmaker penalized or paid customers with the goal of excluding rival Advanced Micro Devices from deals.

State prosecutors served a "wide-ranging" subpoena seeking documents and information on Intel's allegedly anti-competitive practices, Attorney General Andrew Cuomo said in a statement. Prosecutors are investigating whether Intel violated state and federal laws.

"After careful preliminary review, we have determined that questions raised about Intel's potential anticompetitive conduct warrant a full and factual investigation," Cuomo said.

Intel was not immediately available for comment.

The attorney general's office is investigating whether Intel penalized computer manufacturers for purchasing microprocessors from AMD and other competitors, improperly paid customers for exclusive contracts, and illegally cut off competitors from distribution channels.

Intel's dominance of the worldwide market for processors that power the majority of desktops, notebooks, and servers puts it in a position where it could illegally use monopolistic practices in shutting out rivals, Cuomo said. The global market for x86 processors is more than $30 billion annually, and Intel accounts for 90% of it in terms of revenue and 80% by volume.

"Our investigation is focused on determining whether Intel has improperly used monopoly power to exclude competitors or stifle innovation," Cuomo said.

The New York attorney general's office isn't the first agency to investigate antitrust allegations against Intel. Probes in Europe and Asia resulted in formal actions, including a cease-and-desist order. In July, the European Commission and the Korean Fair Trade Commission reached separate preliminary conclusions that Intel violated competition laws. In 2005, the Japanese Fair Trade Commission reached similar conclusions, and Intel agreed to stop.

In August, the American Antitrust Institute, a nonprofit Washington, D.C., advocacy group, asked the Federal Trade Commission to take a more active role in checking Intel's anti-competitive practices against rival AMD, following the findings in Europe and Asia.

In March 2005, AMD filed its federal antitrust suit against Intel in Delaware. The trial is scheduled for April 2009. The suit has shown the intensity of competition between Intel and AMD, with each side having accused the other of trying to sway public opinion through media manipulation.