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AMD sues Intel alleging monopoly abuse

OUT-LAW News, 29/06/2005

Advanced Micro Devices Inc. (AMD) sued Intel on Monday, alleging that its chip-making rival has abused a monopoly position in the x86 microprocessor market by coercing 38 companies into steering clear of AMD.

According to the complaint, Dell, Sony, Hitachi and many others were forced into signing Intel-exclusive deals in return for outright cash payments, discriminatory pricing or marketing subsidies.

Other customers, including NEC, Acer and Fujitsu, were coerced into partial exclusivity agreements by conditioning rebates, allowances and market development funds on their agreement to limit or forgo purchases from AMD, says the complaint.

Intel is also accused of establishing a system of discriminatory and retroactive incentives, and of threatening retaliation against customers for introducing AMD computer platforms.

According to AMD, in 2000, the then Compaq CEO, Michael Capellas, told the firm that because of the volume of business given to AMD, Intel had withheld delivery of critical server chips. Saying “he had a gun to his head,” he told the firm he had to stop buying.

AMD also reports Gateway executives as saying that Intel had beaten them into "guacamole” in retaliation for dealings with AMD.

Other concerns outlined in the complaint include the establishment of quotas, forcing PC makers and tech partners to boycott AMD product launches or promotions, and forcing technical standards and products onto the market with the intention of handicapping AMD in the marketplace.

Intel has been the subject of several antitrust investigations in the past.

In March, the Fair Trade Commission of Japan found that Intel had abused its monopoly power by offering rebates and discounts to five Japanese PC makers on condition that they stop or restrict the number of chips they bought from Intel's rivals.

A similar investigation by the European Commission is ongoing.

Thomas McCoy, AMD executive vice president, legal affairs and chief administrative officer, said: "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.”

He continued:

"We encourage regulators around the world to take a close look at the market failure and consumer harm Intel’s business practices are causing in their nations. Intel maintains illegal monopoly profits at the expense of consumers and computer manufacturers, whose margins are razor thin. Now is the time for consumers and the industry worldwide to break free from the abusive Intel monopoly.”

Intel has made no comment.

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