Thursday, January 10, 2008

New York launches antitrust probe into Intel

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New York state launched a formal investigation of Intel Corp on Thursday, to determine if the world's No. 1 chipmaker broke state and U.S. antitrust laws to squeeze out its main rival, Advanced Micro Devices Inc.

New York state Attorney General Andrew Cuomo said his office issued a broad subpoena seeking information after a preliminary probe raised questions about whether Intel coerced customers to exclude AMD from the worldwide market for microprocessors, the main computing engines of PCs.

Intel is facing similar investigations in Europe and Asia, although federal antitrust enforcers in Washington have so far declined to take up the matter.

Shares of Intel were down 1.1 percent in late afternoon trading on Nasdaq to $22.50, while AMD shares were up 7.8 percent to $5.96 on the New York Stock Exchange.

"Our investigation is focused on determining whether Intel has improperly used monopoly power to exclude competitors or stifle innovation," Cuomo said in a statement. "We will also look at whether Intel abused its power to remove competitive threats or harm competition in violation of New York and federal antitrust laws."

Intel spokesman Chuck Mulloy confirmed the company had received the subpoena and would "work very hard" to comply with the subpoena, in keeping with its normal practice.

"We believe our business practices are lawful and that the microprocessor market is competitive and is functioning as one would expect a competitive market to function," Mulloy said.

AMD said it had been contacted by Cuomo's office. "I can confirm that we have received a subpoena, too," said spokesman Drew Prairie.

Sen. Charles E. Schumer, a New York Democrat, said the U.S. Federal Trade Commission was remiss in not doing a similar probe.

"Antitrust investigations into Intel are springing up everywhere except Washington. It's high time the FTC woke up and started looking into practices that are harming American consumers and technological innovation," he said in a statement.

The New York Times reported in October that FTC Chairman Deborah Majoras had rejected requests by lawmakers, other commissioners and AMD to open a formal antitrust investigation into Intel.

"We typically don't even confirm the existence of investigations," FTC spokesman Mitch Katz said on Thursday.

According to a 2005 lawsuit AMD filed against Intel in Wilmington, Delaware, Intel abused its No. 1 position in the $30-plus billion market for microprocessors by encouraging its customers to avoid AMD. Intel has denied the allegations.

On Monday in Brussels, an Intel spokeswoman said the company had responded to antitrust charges filed by the European Commission and would seek a hearing. The commission charged Intel last July with slashing prices below cost and offering huge rebates in an illegal attempt to drive the smaller AMD out of the market.

The EC charges and the response are confidential.

In South Korea, the Fair Trade Commission filed antitrust charges against Intel in September 2007. The case is pending.

In Japan, the Fair Trade Commission concluded in 2005 that Intel violated that country's Antimonopoly Act. Intel disagreed with the findings but accepted the commission's recommendation, a move that allowed it to avoid a trial.