AMD Hits Intel With Antitrust Suit

UPDATED: AMD has filed an antitrust complaint against Intel in U.S.
federal district court, accusing the company of unlawfully maintaining a
monopoly in the x86 microprocessor market by shunting customers away from

AMD is claiming Intel paid companies like Dell and Toshiba not to do
business with AMD, and paid Sony millions for
exclusivity. AMD claims its share of Sony’s business went from 23 percent in
2002 to 8 percent in 2003, to zero percent today.

In its case filing, AMD also alleged that Intel forced NEC, Acer and
Fujitsu into partial exclusivity agreements by offering rebates to those who
agreed to limit or forego AMD purchases. The chipmaker also said Intel paid
NEC several million dollars for caps on NEC’s purchases from AMD.

The Sunnyvale, Calif., company is seeking unspecified treble damages under
the Clayton Act for losses it claims it has sustained, said Charles Diamond,
partner with O’Melveny & Myers LLP and lead outside legal counsel for AMD,
on a conference call.

AMD Chairman, President and CEO Hector Ruiz said on the call that AMD is
using the respect it has garnered for its technology to remedy “the
imbalance that has gone on in the microprocessor sector for far too long.”

“History shows that monopolies limit choice, stifle innovation, and harm
consumers,” Ruiz said. “Monopolies do what is good for them not their
customers. Intel is a monopoly, pure and simple. It is time the industry
broke free from their chains.”

Intel did not respond to a request for comment on the suit.

The most popular type of chip architecture for so-called volume servers is the x86 microprocessors running the Microsoft Windows, Solaris and Linux families of
operating systems. Intel’s share of this market currently counts for about
80 percent of worldwide sales by unit volume and 90 percent by revenue, AMD
said in a statement.

AMD has traditionally run No. 2 to top chipmaker Intel. The company has been
praised for its superior 64-bit architecture, but that won’t necessarily help
it win back enough market share from Intel to level the playing field.

Now AMD is pinning its victory hopes to a recent ruling from the Fair Trade
Commission of Japan (JFTC), which found that
Intel abused its monopoly power to exclude fair and open competition.

The JFTC decided that Intel deliberately engaged in illegal business
practices to stop AMD’s increasing market share by imposing limitations on
Japanese PC manufacturers. Intel did not contest these charges.

Moreover, the European Commission is pursuing
an investigation against Intel for similar possible antitrust violations and
is cooperating with the Japanese authorities.

The JFTC’s finding and Intel’s lack of a challenge to that finding was a
green light for AMD to press onward with the suit, said Thomas McCoy, AMD
executive vice president, legal affairs and chief administrative officer. He
said Intel harms its own customers to crush any competition, engaging in
seven forms of illegality on three continents.

“It all adds up to one, massive global antitrust violation,” McCoy said.
“Intel is using illegal sales tactics and illegal pricing mechanisms to
avoid a fair fight that might risk its monopoly margins.”

McCoy pointed to the fact that though AMD is an acknowledged technology
leader, Dell, Sony and Toshiba don’t buy one single AMD chip. Intel’s
exclusive deals with Dell, Sony and Toshiba bar AMD from one-third of the
world notebook market and half of the U.S. sales, he said.

Intel has stunted AMD’s revenue growth, he said, noting that AMD’s desktop
business is no greater now than it was during the high-tech spending
doldrums of 2002.

Redmonk analyst James Governor said that while antitrust regulation tends to
be weak around the globe, AMD’s allegations could be an interesting
instrument to slow down Intel.

“If you’re AMD and you’re riding along on a bicycle and Intel is riding
along on a motorbike and you’ve got a stick or a crowbar, you might as well
try and throw it into the wheels,” Governor said. “Certainly AMD is keen to
ensure that it is negotiating on a level playing field.”

On the flipside, Governor said: “Intel will not appreciate antitrust
scrutiny. Any business is going to find that a real drag. Look at the levels
of bureaucracy Microsoft has had to put in place in order to comply with
some of its sanctions.”

AMD filed its 48-page suit in a federal court in Delaware. Despite the fact
that both AMD and Intel hail from Santa Clara County, Calif., Delaware has
been a common venue for lawsuits for companies looking for the efficient
resolution of high-tech issues, particularly with respect to antitrust
cases, said Diamond.

Going forward, Diamond said AMD’s next step is to find significant voluntary
compliance and help from partners to build its case against Intel. Failing
that, Diamond said AMD will use the court to get the evidence it needs.

“Even those who fear Intel’s retaliation, we expect to crack open their
files through the subpoena process,” Diamond said. “We started that process
this morning. We have asked 40 major industry majors around the world to
undertake steps necessary to preserve their e-mail, correspondence and
everything else that we’ll need.”

He also said he expects Intel to drag its feet to protract the proceedings
as long as it can: AMD’s goal is to get the case to trial before the end of

The full complaint may be viewed here.

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