New York State files antitrust suit against Intel

“New York’s attorney general filed antitrust charges against Intel Corp., alleging the chip giant threatened computer makers and paid huge kickbacks to stop them from using competitors’ chips,” Liz Rappaport and Don Clark report for The Wall Street Journal.

“The suit brought by New York’s top state prosecutor, Andrew Cuomo, alleges that for several years Intel sought to maintain its dominance by paying billions of dollars in kickbacks to computer makers under the guise of ‘rebates,'” Rappaport and Clark report. “The suit also alleges Intel threatened computer-makers—including Hewlett-Packard Co., International Business Machines Corp., and Dell Inc.—with retribution if they marketed products with chips made by competitors.”

Rappaport and Clark report, “Intel engaged in ‘a world-wide, systematic campaign of illegal conduct,’ Mr. Cuomo said in a press release. ‘Intel used bribery and coercion to maintain a stranglehold on the market.'”

“In 2006, Intel allegedly paid about $2 billion to Dell to maintain its relationship as the computer maker’s exclusive chip supplier—a ‘rebate’ package that was so large, it exceeded Dell’s own reported net income, according to the complaint,” Rappaport and Clark report.

Full article here.

MacDailyNews Take: This doesn’t have anything to do with that US$4.6 billion Luther Forest GLOBALFOUNDRIES (AMD) semiconductor fab — which is, oh, by the way, only the largest economic development project in the history of New York State — that recently broke ground, does it? Just asking, since such a massive thing would seem to have its own gravitational force, yet we see absolutely no mention of it in the Wall Street Journal article, that’s all.

15 Comments

  1. Mikey Dell made a deal with devil when took back control of his company. He did it the old fashioned way, he conspired using dubious secret intel.

    Imagine, intel playing everyone against the middle and Apple, knowingly or ignorantly made a deal also.

    This case smacks of potential Federal prosecution. Can you imagine how the witness list is going to take shape for both the Defense and the government?

  2. Intel sales guy to Michael Dell: “While you are considering our offer please have a look at this DVD titled ‘Is bribery right for you?’ The narrator may refer to you by name while she dances.”

  3. Another person of note who could get sucked into this is now running for US Senate representing California. Carly Fiorina.

    She was ousted from HP after the company’s stock had lost half its value under her watch.
    She was anti-Steve Jobs.
    She authorized spying on HP board members.
    The business magazine web site Condé Nast Portfolio listed Fiorina as one of the “The 20 Worst American CEOs of all time,” characterizing the HP-Compaq merger as widely regarded as a failure, and citing the halving of HP’s stock value under Fiorina’s tenure.

    And more importantly, shortly before she stepped down, she was confronted by the board with a list of highly dubious practices and processes, for which she accused others of betraying her by leaking the information to the board.

    While none of it was disclosed publicly, she was paid 20 million to go away quietly. It wouldn’t surprise me if she was involved in this Intel scandal.

  4. “The suit brought by New York’s top state prosecutor, Andrew Cuomo, alleges that for several years Intel sought to maintain its dominance by paying billions of dollars in kickbacks to computer makers under the guise of ‘rebates,'” Rappaport and Clark report.”

    GASP! Next thing you’ll know, they’ll start reducing the price of products under the guise of “discounts”!! What treachery!!! Look how low these greedy, greedy businesspeople will stoop to make make their dirty, dirty profits!!

    Bad Intel! Don’t you know that discounts and rebates can only lead to customer retention and increased profits!!??? What were you thinking???

    You will pay dearly for enriching your stockholders! Go Cuomo!

  5. Cuomo is pathetic, basically intel will have to pay up front–hey come to think of it that’s exactly what Jessie Jackson and Al Sharpton do–make a public statement threatened to sue (whatever you can come up with) keep your hand out long enough and tada!!! magically money appears and you move on to your next victim. WOW I thought my state was F..k up, man I’m glad I’m not in NY–and I don’t run a company making money–you never know when one of these m—th-[p[[fkrs is going to t show up

  6. You just can’t leave it alone, can you? If a news item isn’t specifically about someone on your enemies list, you stretch and bend it until it is. Your pananoia is pathetic, as is your myopic memory about such matters.

    Do you remember [Democrat] Eliot Spitzer’s little spying escapade?

    “The Eliot Spitzer political surveillance scandal (also known as Troopergate) broke out on July 23, 2007, when New York State Attorney General Andrew Cuomo’s office admonished Governor of New York Eliot Spitzer’s administration for ordering the State Police to create special records of Senate majority leader Joseph L. Bruno’s whereabouts when he traveled with police escorts in New York City.” Hmmm.

    And his resignation for sexual ditherings didn’t make THAT go away either; he’s still under investigation for that little dalliance with the black arts.

    So be careful with your commentary, Sum. People in glass house shouldn’t . . . etc. . . . etc. . . . etc.

  7. Isn’t a rebate just like offering a discount? What about RIM offering 2 for 1 Blackberries, or M$ selling xboxes for cost. Sure the scale is different but the overall cost could be similar.

    Dell now sells AMD processors IIRC. That bribe did last too long.

    Many companies have preferred or exclusive vendors and in some cases the negotiated deal provides large incentives for one of the players. I’m sure Dell checked out AMD but got a better deal with Intel.

  8. No news here. There isn’t a Fortune 500 company on the planet that isn’t guilty of market manipulation, insider trading, and implicit (if not explicit) corruption. Want evidence? Track the flow of money on K Street. For the past century, the USA has been a democracy of the corporations, by the corporations, for the corporations.

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