New York Attorney General Andrew Cuomo subpoenaed both Intel and Advanced Micro Devices as part of an antitrust probe of pricing practices in the microchip market. Cuomo is investigating whether Intel violated New York and federal laws by enticing or strong-arming OEMs into buying its chips over AMD's.
"Our investigation is focused on determining whether Intel has improperly used monopoly power to exclude competitors or stifle innovation,'' Cuomo said Thursday.
The New York action follows a preliminary finding by the European Commission that Intel illegally used its market power to take sales away from AMD. On Monday, Intel asked the European Union for a hearing to respond to the EC ruling. The Korean Fair Trade Commission also issued a preliminary finding that Intel violated anti-competitive laws.
In 2005, AMD filed a federal lawsuit against Intel, alleging that Intel used scare tactics and coercion to convince manufacturers not to buy AMD's products. Among AMD's allegations were that Intel threatened to withhold critical chip deliveries from manufacturers that bought AMD chips. Former Compaq CEO Michael Capellas said Intel put "a gun to his head" by threatening to pull server chips if Compaq bought AMD chips.
AMD's lawsuit, in turn, was based on an investigation by the Japanese Fair Trade Commission, which found Intel engaged in antitrust behavior by offering rebates to Japanese manufacturers that agreed not to buy AMD chips.
Cuomo is seeking information on whether Intel penalized computer manufacturers for purchasing x86 CPUs from AMD and other competitors, and whether Intel paid customers for exclusivity and illegally cut off rivals from distribution channels.
A preliminary review revealed that "questions raised about Intel's potential anti-competitive conduct warrant a full and factual investigation," Cuomo said in a statement. "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."
Intel dominates the $30 billion x86 market, controlling 90 percent of the market by revenue and 80 percent by volume. Intel refused comment on the subpoena, and an AMD spokesman only acknowledged receipt of the subpoena.
Details of Intel's response to the European Commission's preliminary ruling were not released, but Intel spokesman Chuck Malloy said Intel "had to match" the commission's "fairly lengthy document." Malloy added, "They brought a serious case, and we filed a serious response."
In a statement last year, Thomas McCoy, AMD's chief administrative officer, said Intel's alleged anti-competitive behavior is "a tool of a monopolist to insulate itself from having to compete on the basis of innovation and price, and that's why it's illegal in virtually every jurisdiction in the world."