Intel Agrees to Settle New York Attorney General’s Antitrust Action

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Intel Corporation announced yesterday that it had reached an agreement with the New York State Attorney General to terminate an antitrust lawsuit filed by the state in November 2009. Intel has agreed to pay $6.5 million to cover some of the costs incurred by the New York Attorney General in the litigation. The computer chip maker did not admit to any wrongdoing.

Recent Decisions

The agreement to end the litigation comes after three recent decisions of the federal district court in Wilmington, Delaware, scaling back the suit. In December 2011, the court dismissed the state’s Donnelly Act treble damages claims on behalf of New York consumers and non-state public entities; dismissed its Donnelly Act claims on behalf of non-state public entities, such as political subdivisions, local entities, and public authorities; and granted Intel’s motion for partial summary judgment on statute of limitations grounds (2011-2 Trade Cases ¶77,711, 2011-2 Trade Cases ¶77,712, 2011-2 Trade Cases ¶77,713).

The settlement agreement states that the decisions in favor of Intel “effectively eviscerated the State’s damages claims.” The settlement “releases Intel from all claims, known or unknown, including claims assigned to the State, up through the date of execution of the Settlement Agreement, that were or could have been asserted in the Action . . . .” Pursuant to the settlement, the New York Attorney General will terminate its investigation into Intel.

Exclusionary Conduct

The state filed the action in November 2009, alleging that Intel engaged in a systematic worldwide campaign of illegal, exclusionary conduct to maintain its monopoly power and prices in the market for x86 microprocessors, the “brains” of personal computers (PCs).

The state alleged violations of the Sherman Act and New York’s Donnelly Act and Executive Law. It sought monetary relief on behalf of the state as a purchaser of computers containing x86 microprocessors, as well as New York consumers and non-state public entities who purchased such computers. In addition, the state sought injunctive and other equitable relief.

“Following recent court rulings in Intel’s favor that significantly and appropriately narrowed the scope of this case, we were able to reach an agreement with New York to bring to an end what remained of the case,” said Doug Melamed, senior vice president and general counsel at Intel, in a February 9 news release.

“We have always said that Intel’s business practices are lawful, pro-competitive and beneficial to consumers, and we are pleased this matter has been resolved,” Melamed stated.

The case is State of New York v. Intel Corp., U.S. District Court, D. Delaware. No. 09-827-LPS. A copy of the settlement agreement appears here.

New York State Charges Intel with Monopolization

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Intel Corporation unlawfully maintained its monopoly in the market for x86 central processing unit (CPUs) in violation of New York’s Donnelly Act and Sec. 2 of the Sherman Act, the State of New York alleges in an 83-page complaint filed today in a federal district court in Delaware.

The state is seeking injunctive relief and damages on behalf of its governmental agencies as well as New York consumers who purchased products containing x86 CPUs.

According to the complaint, Intel “engaged in a systematic worldwide campaign of illegal, exclusionary conduct to maintain its monopoly power and prices in the market for x86 microprocessors, the ‘brains’ of Personal Computers (PCs).” Intel allegedly bribed and bullied computer makers in an effort to deprive Advanced Micro Devices, Inc. of distribution channels for its competing microprocessors.

“Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market,” said New York Attorney General Andrew M. Cuomo, in a statement announcing the complaint.

“Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices," Cuomo charged."These illegal tactics must stop and competition must be restored to this vital marketplace.”

European Commission Fine

New York’s complaint follows a May 2009 European Commission (EC) decision fining the computer chip maker €1.06 billion (approximately $1.44 billion U.S.) for violating EC antitrust rules prohibiting the abuse of a dominant position. The EC found that Intel engaged in illegal anticompetitive practices to exclude competitors from the market of computer chips called x86 CPUs.

In addition to imposing the fine, the EC ordered Intel to cease the challenged practices. In September, the EC made public a redacted version of its May decision. Intel has announced that it was appealing the EC decision to the Court of First Instance of the European Community.

Federal Trade Commission Investigation

The Federal Trade Commission has also been conducting an investigation of Intel’s allegedly anticompetitive practices. Intel announced in June 2008 that the FTC had issued a subpoena related to its “business practices with respect to competition in the microprocessor market.”

At that time, the company explained that it had been working closely with the FTC since 2006 on an informal inquiry into competition in the microprocessor market and that it had provided the Commission staff with a considerable amount of information and thousands of documents.