AMD files antitrust lawsuit against Intel in US federal district court

Wednesday, June 29, 2005

AMD filed an antitrust complaint against Intel Corporation two days ago in U.S. federal district court for the district of Delaware under Section 2 of the Sherman Antitrust Act, Sections 4 and 16 of the Clayton Act, and the California Business and Professions Code.

According to the complaint, Intel has unlawfully maintained its monopoly by, among other things:

• Forcing major customers such as Dell, Sony, Toshiba, Gateway, and Hitachi into Intel-exclusive deals in return for outright cash payments, discriminatory pricing or marketing subsidies conditioned on the exclusion of AMD;

• According to industry reports, and as confirmed by the JFTC in Japan, Intel has paid Dell and Toshiba huge sums not to do business with AMD.
• Intel paid Sony millions for exclusivity. AMD’s share of Sony’s business went from 23 percent in ‘02 to 8% in ‘03, to 0%, where it remains today.

• Forcing other major customers such as NEC, Acer, and Fujitsu into partial exclusivity agreements by conditioning rebates, allowances and market development funds (MDF) on customers’ agreement to severely limit or forego entirely purchases from AMD;

• Intel paid NEC several million dollars for caps on NEC’s purchases from AMD. Those caps assured Intel at least 90% of NEC’s business in Japan and imposed a worldwide cap on the amount of AMD business NEC could do.

• Establishing a system of discriminatory and retroactive incentives triggered by purchases at such high levels as to have the intended effect of denying customers the freedom to purchase any significant volume of processors from AMD;

• When AMD succeeded in getting on the HP retail roadmap for mobile computers, and its products sold well, Intel responded by withholding HP’s fourth quarter 2004 rebate check and refusing to waive HP’s failure to achieve its targeted rebate goal; it allowed HP to make up the shortfall in succeeding quarters by promising Intel at least 90% of HP’s mainstream retail business.

• Threatening retaliation against customers for introducing AMD computer platforms, particularly in strategic market segments such as commercial desktop;

• Then-Compaq CEO Michael Capellas said in 2000 that because of the volume of business given to AMD, Intel withheld delivery of critical server chips. Saying “he had a gun to his head,” he told AMD he had to stop buying.
• According to Gateway executives, their company has paid a high price for even its limited AMD dealings. They claim that Intel has “beaten them into ‘guacamole’” in retaliation.

• Establishing and enforcing quotas among key retailers such as Best Buy and Circuit City, effectively requiring them to stock overwhelmingly or exclusively, Intel computers, artificially limiting consumer choice;

• AMD has been entirely shut out from Media Markt, Europe’s largest computer retailer, which accounts for 35 percent of Germany’s retail sales.
• Office Depot declined to stock AMD-powered notebooks regardless of the amount of financial support AMD offered, citing the risk of retaliation.

• Forcing PC makers and tech partners to boycott AMD product launches or promotions;

• Then-Intel CEO Craig Barrett threatened Acer’s Chairman with “severe consequences” for supporting the AMD Athlon 64 launch. This coincided with an unexplained delay by Intel in providing $15-20M in market development funds owed to Acer. Acer withdrew from the launch in September 2003.

• Abusing its market power by forcing on the industry technical standards and products that have as their main purpose the handicapping of AMD in the marketplace.

• Intel denied AMD access to the highest level of membership for the Advanced DRAM technology consortium to limit AMD’s participation in critical industry standard decisions that would affect its business.
• Intel designed its compilers, which translate software programs into machine-readable language, to degrade a program’s performance if operated on a computer powered by an AMD microprocessor.