New York AG files antitrust suit against Intel

After launching their investigation last year, today New York Attorney General Andrew Cuomo has officially sued Intel for violating state and federal antitrust laws. From the opening of the suit:

Intel has 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").
By exacting exclusive or near-exclusive agreements from large computer makers (“Original Equipment Manufacturers” or “OEMs”) in exchange for payments totaling billions of dollars, and threatening retaliation against any company that did not heed its wishes, Intel robbed its competitors of the opportunity to challenge Intel’s dominance in key segments of the market. This illegal behavior was highly detrimental to consumers, competition, and innovation.

The suit, which weighs in at 87 pages long, seems to be based on much of the same evidence the European Commission brought against Intel. For instance, the suit alleges that Dell received preferential supply of CPUs and deep CPU discounts in return for remaining exclusive with Intel. From page 31 of the suit:

In pure dollar terms, Dell was far and away the leader in receiving Intel’s largess. For example, over the four year period from February 2002 to January 2007, it received approximately $6 billion in “rebates.” Most of this money was furnished to Dell under programs initially titled “MOAP” and then “MCP.” “MOAP” was an acronym standing for “Mother of all Programs.” The term MOAP was later replaced in the lexicon by another acronym “MCP,” which purportedly (and misleadingly) stood for “Meet Competition Payments.” Both generally referred both to Dell’s global percentage based rebates and to lump-sum payments made by Intel to Dell during the relevant period.
Intel attempted to maintain the fiction that such payments were, as the latter phrase was meant to convey, legitimate price cuts in response to particular AMD competitive offers. In fact, the payments were decoupled from particular products. Intel would determine the total MCP percentage or amount for Dell for a given period, and only then create paper work at both Intel and Dell which purported to allocate portions of the total to individual CPU products in order to retroactively “back into” a superficial justification for its anticompetitive conduct.
Intel also assured Dell of “preferred” supply compared with other OEMs. Access to adequate and timely supply of products from Intel was a major concern for all OEMs, whose business was extremely time-sensitive. Internal Intel emails show that satisfying 100% of Dell’s demand was a top priority for Intel, even when demand from other OEMs went unmet. In an October 2005 email, a senior Intel executive acknowledged: “[W]e know supporting Dell <100% [less than 100%] of whatever they ask for is not our working model...”

This is just scratching the surface of the suit though. There are numerous incidents cited with Dell, and other examples from IBM and HP. AMD's own suit against Intel is currently slated to begin in March.

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