In Antitrust Suit, AMD Claims Intel Used Coercion - InformationWeek

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6/28/2005
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In Antitrust Suit, AMD Claims Intel Used Coercion

AMD has filed an antitrust suit against Intel alleging that its archrival has been operating an unlawful monopoly in the x86 microprocessor market and that it has been coercing computer makers and others in their dealings with AMD.

LONDON — AMD Inc. has filed an antitrust suit against Intel Corp. alleging that its archrival has been operating an unlawful monopoly in the x86 microprocessor market and has coerced computer makers, distributors, small system builders and retailers in their dealings with AMD.

The 48-page complaint, filed Tuesday (June 28) in the U.S. District Court in Delaware, identifies 38 companies that AMD alleges have been victims of coercion by Intel. It also claims seven illegal tactics across three continents.

"Everywhere in the world, customers deserve freedom of choice and the benefits of innovation — and these are being stolen away in the microprocessor market," said AMD CEO Hector Ruiz.

"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."

Lawmakers in the U.S., Japan and Europe have been pursuing investigations against Intel for similar alleged antitrust violations. Japanese authorities and the European Commission have been coordinating their efforts.

Added Thomas McCoy, AMD's executive vice president: "You don't have to take our word for it when it comes to Intel's abuses; the Japanese government condemned Intel for its exclusionary and illegal misconduct."

McCoy urged regulators "to take a close look at the market failure and consumer harm Intel's business practices are causing in their nations."

The litigation follows a recent ruling from the Fair Trade Commission of Japan that found Intel had abused its monopoly on x86 devices to exclude fair and open competition, and that it had been deliberately engaged in illegal business practices to stop AMD increasing market share.

AMD said Intel had about 80 percent of worldwide x86 microprocessor sales by unit volume and 90 percent by revenue, giving it entrenched monopoly ownership and excessive market power. The suit makes numerous and cutting allegations. For instance, it claims Intel forced major customers such as Dell, Sony, Toshiba, Gateway and Hitachi into exclusive deals in return for cash payments, discriminatory pricing or marketing subsidies conditioned on the exclusion of AMD.

It alleges that Intel forced other major customers such as NEC, Acer and Fujitsu into partial exclusivity agreements by conditioning rebates, allowances and market development funds for agreeing to "severely limit or forego entirely purchases from AMD".

The suit also claims Intel paid Sony "millions" for exclusivity. AMD's share of Sony's business plunged from 23 percent in 2002 to 8 percent in 2003. It currently sells no microprocessors to Sony.

The lawsuit also suggests Intel used its purchasing power to block customers from buying AMD products by threatening "retaliation against customers for introducing AMD computer platforms." It also alleges that quotas were used among retailers and that Intel forced PC makers and technology partners to boycott AMD product launches or promotions.

Intel could not be reached for comment at the time this story was posted.

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