AAI Calls Cuomo's Antitrust Lawsuit against Intel "Critical to Maintaining Competition" in the Microchip Market

The American Antitrust Institute (AAI) applauded New York State's complaint against Intel which was announced earlier today. "Although this filing largely replicates the charges already investigated and sustained in Japan, Korea and the European Union, a U.S. case is critical to maintaining competition in the global microchip market," said AAI President Albert Foer. The filing alleges that Intel launched a loyalty discount mechanism and other legally questionable tactics at a time when competitor Advanced Micro Devices' (AMD) new microchip was rapidly gaining market share. The suit charges that Intel executed this global strategy to hamper AMD's growth. New York will attempt to prove antitrust violations that could lead to injunctive relief as well as damages resulting from Intel's overcharges. "The computer industry, with its large economies of scale, has seen many prices go down," explained Foer. "But, since Intel's prices did not go down as much as market economics predict they should have, there is potential for damages to be proven." Foer explained that this case will have an impact on retailers, OEM's, and U.S. consumers because it will determine whether the world's dominant supplier of microchips should be allowed to stamp out its only competitor through tactics that Cuomo describes as 'bribery and coercion'. "There would be no point to inventing a better mousetrap if your dominant competitor has the right to keep your customers from purchasing the improved mousetrap," said Foer. Foer also stressed the importance of a U.S.-based complaint. "Even though the European Union and others long have been investigating similar practices, U.S. action is needed to ensure that the remedy will protect our consumers," said Foer. "Without a U.S.-based lawsuit, the Europeans, Japanese, and Koreans could tailor the remedies to protect their consumers, leaving U.S. consumers still vulnerable to Intel's predatory conduct." The Federal Trade Commission (FTC) has been investigating the same allegations without yet issuing a formal complaint. "The New York action brings additional pressure on the FTC to announce its intentions," said Foer. "It is not unusual for a state to bring an antitrust case on behalf of its own consumers and businesses, even if a federal investigation might be in the works, although there is likely to be substantial coordination behind the scenes, across state and national jurisdictional lines." In addition to the international cases, a private case brought by AMD, Intel's only competitor in the world's microchip market, is in the discovery phase in federal court in Wilmington, Delaware.