Cuomo files anti-trust lawsuit against Intel

ALBANY, Nov 04, 2009 (Albany Times Union - McClatchy-Tribune Information Services via COMTEX) -- INTC | Quote | Chart | News | PowerRating -- Attorney General Andrew Cuomo filed an antitrust lawsuit against Intel Corp. this morning, a legal move, that if successful, could boost the fortunes of a $4.2 billion computer chip factory being built in Saratoga County.

Intel, the world's No. 1 computer chip maker, has been under the scrutiny of regulators across the globe for alleged anti-competitive behavior of paying off customers and bullying those who did not buy its chips for the PCs, laptops and servers sold to retail consumers and businesses.

Intel has also been sued by Advanced Micro Devices Inc., the Sunnyvale, Calif., company that spun off its manufacturing operations earlier this year into GlobalFoundries Inc., the company that is building what's known as Fab 2 at the Luther Forest Technology Campus in Malta.

Since AMD is GlobalFoundries' largest customer, any penalties against Intel would likely benefit AMD -- and therefore GlobalFoundries and the Capital Region.

New York state will contribute up to $1.4 billion toward the Fab 2 project.

However, in a conference call with reporters this morning, Cuomo said that his lawsuit, which was a year in the making and contained startling allegations of high-level executive activity at Intel, has nothing to do with GlobalFoundries or the state's interest in the Fab 2 project.

He said that the main reason for the lawsuit is to punish Intel on behalf of consumers in New York and across the country who were "robbed" of a competitive marketplace and lower prices.

"It's actually a matter that has international attention," Cuomo said. "It's not just a New York matter."

The lawsuit, filed in federal court in Delaware, contains e-mail exchanges between Intel Chief Executive Officer Paul Ottelini and Michael Dell, CEO of Dell Inc., one of the world's largest computer manufacturers and one of Intel's largest customers.

In one of the e-mails, Michael Dell complains about the performance of Intel's chips, but Ottelini brushes him off and reminds Dell that his company is getting $1 billion a year to keep buying Intel's chips.

"This was judged by your team to be more than sufficient to compensate for the competitive issues," Ottelini wrote back to Dell.

The Cuomo lawsuit alleges that Intel paid Dell $6 billion between 2002 and 2007 to keep buying its chips and ignoring AMD's better products.

"None of the current benchmarks and reviews say that Intel based systems are better than AMD," Dell tells Ottelini in a subsequent e-mail. "We are losing the hearts, minds and wallets of our best customers."

Eric Corngold, executive deputy attorney general for economic justice under Cuomo, said the e-mails show that anti-competitive behavior was being directed at the highest levels at Intel.

"We're not talking about a couple of isolated individuals," Corngold said. "We're talking a central business strategy."

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