New York's attorney general is investigating whether Intel violated state and federal antitrust laws by penalizing computer makers, cutting of competitors' distribution channels and improperly paying customers for exclusivity.
Specifically the investigation is probing whether AMD has a fair chance to supply its X86 computer processing units for desktop and laptop computers and servers. Currently Intel has 80 percent of the market, according to AG Andrew Cuomo.
''Our investigation is focused on determining whether Intel has improperly used monopoly power to exclude competitors or stifle innovation,'' Cuomo said in the statement. ''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.''
The preliminary investigation into the matter shows that there is a need for a full investigation Cuomo said in a prepared statement. This investigation comes on the heels of a string of allegations and investigations surrounding Intel's dominant market share. In July the EU charged Intel with violating antitrust rules there. In August the FTC was asked to investigate the company by two senators.
ATTORNEY GENERAL CUOMO LAUNCHES ANTITRUST INVESTIGATION OF INTEL [The Associated Press]
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.