Intel dragged to court for abusing monopoly power

In 2005, Michael S Dell's namesake company was getting pounded. His competitors were selling personal computers and servers built on cheap, popular and powerful chips from Advanced Micro Devices (AMD), while Dell had stuck loyally with slower chips from Intel. In an e-mail note to Intel's chief executive, Paul S Otellini, Dell threatened to switch to AMD. "I am tired of losing business," Dell wrote. "We are losing the hearts, minds and wallets of our best customers." Otellini reminded Dell that Intel had paid Dell more than $1 billion in the last year. "This was judged by your team to be more than sufficient to compensate for the competitive issues," he wrote. Dell delayed buying AMD chips, and Otellini said in a later e-mail message to a colleague that "Dell was the best friend money can buy." Such payments to PC makers, along with other aggressive business tactics, are at the heart of the antirust lawsuit filed against Intel on Wednesday by New York's attorney general, Andrew M Cuomo. Cuomo's case, the first antitrust charges against the company in US in more than a decade, follows similar actions by regulators in Europe and Asia. According to Cuomo's lawsuit, Intel, the world's largest chip maker, has for years used large rebates and co-marketing arrangements to talk Dell and other manufacturers into sticking with its products rather than increasing their business with AMD, a much smaller chip maker. "As the supplier of about 80% of the central chips that power PCs and servers, Intel had monopoly power, which it abused," according to Cuomo. Intel has used illegal threats, coercion, fines and bullying to preserve its stranglehold on the market, he said at a news conference. "We intend to stop them." An Intel spokesman, Chuck Mulloy, said the company had done nothing wrong. "Neither consumers, who have consistently benefited from lower prices and increased innovation, nor justice are being served by the decision to file a case now," he said. Intel is no stranger to antitrust controversy. The company has spent the last five years defending itself against antitrust allegations, first in Asia and then in Europe. In May, the European Commission hit Intel with a record $1.45 billion fine for antitrust violations, which the company is appealing. Intel also faces a four-year-old antitrust lawsuit filed by AMD in Federal District Court in Delaware and a continuing investigation by the Federal Trade Commission. Although Intel has faced various antitrust claims for two decades, the cases against it have picked up steam in recent years because of developments in the chip industry. In 2003, AMD, began selling a new line of chips widely regarded as superior in design and performance to Intel's products.

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