AMD Charges Coercion In Antitrust Suit Against Intel - InformationWeek

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6/28/2005
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AMD Charges Coercion In Antitrust Suit Against Intel

Intel used cash payments, discriminatory pricing, and marketing subsidies to force 38 companies to limit purchases from AMD, the suit alleges.

The ongoing battle between Advanced Micro Devices Inc. and Intel has returned to the courtroom, with AMD on Monday filing an antitrust complaint accusing Intel of unlawfully maintaining a monopoly in the x86 microprocessor market through coercion of customers.

In the suit filed in U.S. federal district court, AMD identifies 38 companies that it says have been "victims" of coercion by Intel. AMD maintains that Intel has forced major customers such as Dell, Gateway, Hitachi, Sony, and Toshiba into Intel-exclusive deals in return for cash payments, discriminatory pricing, or marketing subsidies that are based on agreement not to use any AMD products.

"Everywhere in the world, customers deserve freedom of choice and the benefits of innovation, and these are being stolen away in the microprocessor market," Hector Ruiz, chairman, president, and chief executive of AMD, said in a statement. "Whether through higher prices from monopoly profits, fewer choices in the marketplace, or barriers to innovation, people from Osaka to Frankfurt to Chicago pay the price in cash every day for Intel's monopoly abuses."

A spokesman for Intel said on Tuesday morning, "We haven't seen the lawsuit, so we can't provide specific comment, but we believe our sales practices are both fair and consistent with all antitrust laws."

AMD claims that Intel paid Sony millions of dollars for exclusivity, resulting in AMD's share of Sony's business dropping from a high of 23% in 2002 to zero in 2003, where it remains today.

Other major customers such as Acer, Fujitsu, and NEC were "forced" into partially exclusive agreements, the suit said, by conditioning rebates, allowances, and market-development funds on severely limiting purchases from AMD, including paying NEC several million dollars to ensure that Intel has at least 90% of NEC's business.

Intel's illegal practices also extend to retailers, AMD claims. Intel has established and enforced quotas at key retailers such as Best Buy and Circuit City, requiring them to stock overwhelmingly or exclusively Intel-based computers.

AMD and Intel have battled in the courtroom numerous times over the past three decades.

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