Intel, the Landmark Monopoly Case of the 21st Century: New York Moves into the Vacuum

The AAI issued a statement on the launching by New York of an investigation of Intel's alleged anticompetitive activities in the microcomputer market. The AAI press release can be read here. New York's press release is below.

 

Department of Law120 BroadwayNew York, NY 10271212-416-8060 For Immediate Release:New York City Press Office / 212-416-8060 Albany Press Office / 518-473-5525nyag.pressoffice@oag.state.ny.us

Department of LawThe State CapitolAlbany, NY 12224518-473-5525 January 10, 2008

 

ATTORNEY GENERAL CUOMO LAUNCHES ANTITRUST INVESTIGATION OF INTEL

Subpoena Seeks Information on Potentially Monopolistic Practices

NEW YORK, NY (January 10, 2008) - Attorney General Andrew M. Cuomo today served a wide-ranging subpoena seeking documents and information on Intel Corporation (NASDAQ: INTC), the world’s largest maker of computer microprocessors.  Cuomo is investigating whether Intel violated state and federal antitrust laws by coercing customers to exclude its main rival, Advanced Micro Devices (AMD), from the worldwide market for x86 computer processing units (CPU).

“After careful preliminary review, we have determined that questions raised about Intel=s potential anticompetitive conduct warrant a full and factual investigation,” said Attorney General Cuomo.  “Protecting fair and open competition in the microprocessor market is critical to New York, the United States, and the world. Businesses and consumers everywhere should have the ability to easily choose the best products at the best price and only fair competition can guarantee it. Monopolistic practices are a serious concern particularly for New Yorkers who are navigating an information-intensive economy.”

The subpoena served today on Intel seeks documents and information concerning Intel’s pricing practices and possible attempt to exclude competitors through its market domination. The information sought is relevant to whether Intel, among other things:

  • Penalized its customers, primarily computer manufacturers, for purchasing x86 computer processing units (CPU) from competitors;
  • Improperly paid customers for exclusivity;
  • Illegally cut off competitors from distribution channels.

Modern x86 CPUs are currently the industry-wide standard for a majority of desktops, laptops, notebooks, servers, and workstations. The x86 market accounts for over $30 billion in annual worldwide sales, with Intel retaining the lion's share of the market, estimated at 90% by revenue and 80% by volume.

“Our investigation is focused on determining whether Intel has improperly used monopoly power to exclude competitors or stifle innovation,” said Cuomo. “We will also look at whether Intel abused its power to remove competitive threats or harm competition in violation of New York and federal antitrust laws.”

Similar antitrust allegations have been examined by authorities in Europe and Asia and resulted in formal actions, including a cease and desist order, against Intel. In July 2007, the European Commission reached and the Korean Fair Trade Commission reached preliminary conclusions that Intel violated competition law. In 2005, the Japanese Fair Trade Commission concluded that Intel violated its competition laws and Intel agreed to cease and desist.

Both Intel and AMD are based in California