Money Not Driving Lawsuit Against Intel, Claims AMD Lawyer

AUSTIN, Texas — The lawsuit filed Monday by Advanced Micro Devices Inc. alleging that Intel Corp. engaged in monopolistic activity "is not about the money, but about breaking open the market," claimed Chuck Diamond, the lead outside attorney for AMD on the case.

In a conference call with reporters Tuesday, Diamond, along with AMD's CEO Hector Ruiz and chief corporate counsel Tom McCoy, argued that Intel coerced major PC makers Dell, Sony, and Toshiba into buying Intel processors on an exclusive basis. Sony, for example, developed a successful notebook business in Europe, offering systems based on both AMD and Intel processors, McCoy said.

"That didn't sit well with Intel, and they told Sony that you are not going to sell any more computers based on AMD (processors). It was a clear, classic case of being abusive," McCoy said.

The suit claims Intel paid Sony "millions" for exclusivity. AMD's share of Sony's business plunged from 23 percent in 2002 to 8 percent in 2003. It currently sells no microprocessors to Sony.

Ruiz said, "Intel is a monopoly, pure and simple." McCoy added that being a monopoly, in and of itself, is not illegal. What Intel has done with its dominant market share, he claimed, is engage in a "global, massive effort to exclude AMD. It has used its 800-pound gorilla size to hold those companies captive."Ruiz said while AMD's business "is strong across the board," he argued that the company's market share in the desktop and notebook markets has been artificially suppressed because of Intel's alleged coercion. AMD's return to relatively good financial health, McCoy said, "takes off the table any whisper" that AMD is filing the lawsuit simply to gouge funds from Intel, which is about seven times the size of AMD.

Diamond said that AMD is seeking "treble damages" from Intel, though he declined to speculate on the amounts sought in the lawsuit. He added AMD expects the case to be resolved in court over the next 18 months.

AMD's filing of the suit, McCoy said Tuesday, comes after "the proof point" of Japan's Fair Trade Commission decision to warn Intel to stop certain discounting practices that Japan's government had alleged was anti-competitive.

In April, the FTC searched three locations, including Intel Japan's headquarters, and interviewed computer makers and resellers. The 48-page complaint, filed Monday (June 27) in the U.S. District Court in Delaware, identifies 38 companies that AMD alleges have been victims of coercion by Intel. It also claims seven illegal tactics across three continents.

Lawmakers in the United States and Europe have been pursuing investigations against Intel for similar alleged antitrust violations. Japanese authorities and the European Commission have been coordinating their efforts.AMD said Intel had about 80 percent of worldwide x86 microprocessor sales by unit volume and 90 percent by revenue, giving it entrenched monopoly ownership and excessive market power. The suit claims Intel forced major customers such as Dell, Sony, Toshiba, Gateway and Hitachi into exclusive deals in return for cash payments, discriminatory pricing or marketing subsidies conditioned on the exclusion of AMD.

It alleges that Intel forced other major customers such as NEC, Acer and Fujitsu into partial exclusivity agreements by conditioning rebates, allowances and market development funds for agreeing to "severely limit or forego entirely purchases from AMD".

The lawsuit also suggests Intel used its purchasing power to block customers from buying AMD products by threatening "retaliation against customers for introducing AMD computer platforms." It also alleges that quotas were used among retailers and that Intel forced PC makers and technology partners to boycott AMD product launches or promotions.

Intel could not be reached for comment at press time.