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NEW YORK - The legal challenges to Intel Corp.'s sales tactics mounted Wednesday as New York's attorney general accused the world's biggest computer chip maker of using "illegal threats and collusion" to dominate.
In filing a federal antitrust lawsuit, Attorney General Andrew Cuomo accused Intel of using its market prowess to "rule with an iron fist."
Intel's chips act as the "brains" of 80 per cent of the world's personal computers. Cuomo said Intel paid billions of dollars in kickbacks to computer manufacturers and retaliated against those that did too much business with Intel's competitors, namely Advanced Micro Devices Inc.
"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," Cuomo said in a written statement. "Intel's actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices."
An Intel spokesman, Chuck Mulloy, denied the latest charges, as the company has in the past, and said Intel's sales practices were legitimate.
"We never threatened anyone," he said.
At issue are the large annual rebates Intel pays to big customers. Intel has described the rebates as simple volume discounts, but some regulators have disagreed, saying they illegally penalize Intel's customers for going with rivals' products, namely chips from AMD.
AMD has been complaining to regulators for five years that Intel has broken antitrust laws to keep AMD's market share down. The company has found its most sympathetic ear abroad.
In May, the European Union fined Intel a record US$1.45 billion, and last year Korea's Fair Trade Commission fined Intel $18.6 million. Intel is appealing both rulings. In 2005, Japan's Fair Trade Commission found that Intel violated antitrust rules there. Intel accepted that ruling without admitting wrongdoing.
The U.S. Federal Trade Commission is also investigating. That probe might take on increased urgency considering the mounting charges and the Obama administration's pledge to pursue antitrust cases more vigorously than the Bush administration did.
The FTC has investigated Intel before for evidence of anticompetitive conduct, but the company emerged relatively unscathed.
The FTC dropped one probe in 1993, and after another probe accused Intel in 1998 of violating federal law by withholding technical information about its processors from computer makers with whom Intel was involved in patent disputes. Intel settled that case the following year.
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