Intel subpoenaed for documents in new antitrust probe

The case against Intel's right to pay its channel clients for exclusivity has been a matter for a civil court. But if the New York Attorney General finds what he's looking for, the company could find the case against it both upgraded and multithreaded.

The spotlight will no doubt be turned on full for what is likely to become the next huge platform for technology litigation: Newly elected Attorney General Andrew Cuomo, whose surname is already monumental in his home state of New York, has issued subpoenas for documents in a criminal investigation against Intel's conduct.

At issue, essentially one of the same charges AMD has made against Intel in civil court: that Intel used its market dominance in both US markets and those abroad as leverage to make exclusivity deals with some of its principal customers -- deals for purchasing Intel's CPUs only and excluding all of AMD's.

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In a statement this afternoon, Atty. Gen. Cuomo wrote as if he were assuming a much bigger stage than just that of the State of New York, perhaps even addressing an overseas audience.

"Protecting fair and open competition in the microprocessor market is critical to New York, the United States, and the world," wrote Cuomo. "Businesses and consumers everywhere should have the ability to easily choose the best products at the best price and only fair competition can guarantee it. Monopolistic practices are a serious concern particularly for New Yorkers who are navigating an information-intensive economy."

Later, he stated without any reservation that his investigation will determine whether Intel was in violation of both state and federal antitrust law, in a clear implication that federal authorities were either unwilling or incapable of investigating the matter on their own.

Speaking with BetaNews early this evening, Intel corporate spokesperson Chuck Mulloy pointed out that his company has noted an eerie resemblance between the charges AMD made in its civil antitrust trial in Delaware, and the allegations which Cuomo's office said today it is investigating. Besides the exclusivity charge, the Atty. Gen.'s office said it will investigate whether Intel penalized other manufacturers for purchasing CPUs from competitors, and illegally cut off competitors from distribution channels.

But Mulloy renewed his company's assertion that any aggressive action his company took against AMD was all in the course of business, and was all within US legal limits. "The microprocessor market is a competitive market," Mulloy said, "and is behaving the way one would expect it to behave for the benefit of consumers."

On Monday, Mulloy confirmed, Intel filed a response to the latest European Commission Statement of Objections. Consistent with what are called the "Brussels rules," that response is confidential, though he did say Intel made a formal request for an oral and open hearing to respond to the Statement.

Mulloy agreed with our read of Cuomo's statement from earlier today, particularly the part about Intel's responsibility to the world. He noted that the EU utilizes a different standard than the US when determining whether a market player is too large to be aggressive against its competitors; while the American standard is based on market monopolization, the European standard is based on a lesser standard called dominance.

Thus what is likely to be a highly politicized trial could have repercussions in Europe, even if the State of New York ends up agreeing with the US Federal Trade Commission that no formal investigation is required. While the FTC declined to pursue such an investigation, Mulloy reiterated his statement last October that Intel and the FTC continue to cooperate with one another on an informal though continual basis, sharing tens of thousands of documents already and likely to add more. "We have been talking to the FTC for many, many years," he said.

Last October, New York Sen. Charles Schumer (D) publicly asked the FTC to formally investigate Intel's conduct. Today, Sen. Schumer took the FTC to task for not having complied with that request.

"Antitrust investigations into Intel are springing up everywhere except Washington," reads the Senator's statement this afternoon. "It's high time the FTC woke up and started looking into practices that are harming American consumers and technological innovation. The FTC needs to stop looking the other way on Intel and start getting serious about enforcing antitrust law. The FTC is moving at a megahertz pace, in a gigahertz world."

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