No new complaint in New York's antitrust case against Intel

John O'Brien May 16, 2011, 11:00am


NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman won't be allowed to amend the antitrust complaint filed by his predecessor against Intel Corp.

In his last month as attorney general, now-Gov. Andrew Cuomo fought with Intel over the right to file an amended complaint 13 months after his original one was submitted. In November 2009, Cuomo alleged the company threatened and punished companies it viewed as working too closely with its competitors.

Intel cut off payments made under the guise of "rebates" it was making to computer makers, Cuomo said. Intel also funded those makers' competitors and ended joint development ventures, he claimed.

"Having considered the parties' competing arguments, the court concludes that Intel would be unfairly prejudiced from the amendment," U.S. District Judge Leonard Stark wrote May 12, nine days after oral arguments.

"The prejudice to Intel stems primarily from the expansion of the definition of 'consumers' and 'natural persons' embodied within the amendment, as well as the inherent ambiguity of the amendment."

Stark wrote that "natural persons" had been expanded to include small- and medium-sized businesses that purchased Intel products containing x86CPUs.

Cuomo wanted to expand his original complaint to include "small and medium businesses in the group those New York seeks to protect from Intel's anticompetitive conduct."

Intel says the impact of amending the complaint is larger than that.

"In reality, rather than clarify, New York's amendment adds a new, undefined group of 'small and medium businesses' to the existing group of natural persons represented in the original complaint," the company says.

"This change represents a significant expansion of New York's represented parties, thus enlarging the scope of any potential liability on its Donnelly Act and Executive Law claims. New York fails to explain why it originally did not seek to represent such parties or why it waited more than a year to add them."

The Donnelly Act is New York's antitrust law, prohibiting price-fixing, bid-rigging and monopolization, among other practices.

Intel also claims the company will be prejudiced by the amendment, because Intel "has no clear idea" of which specific parties would be represented in the group of "small and medium businesses."

Stark says the ambiguity of the term would cause a burden for Intel during discovery.

"New York's definition is ambiguous as to whether businesses whose sizes changed during the damages period are included within this litigation under the proposed amendment," Stark wrote.

"It is also entirely unclear how employees would be counted: must they work in New York or live in New York or can they work anywhere in the world provided that a 'small and medium business' has some operations in New York? Similarly, what if a business with less than 500 employees in New York has a non-New York office that makes all of its computer purchasing decisions?"

Allegations made in the lawsuit include Intel paying $2 billion to Dell in 2006, threatening HP with the derailment of a server technology and paying IBM $130 million not to launch an AMD-based server product.

It also threatened to stop funding for an IBM/Intel joint project if IBM marketed AMD-based server products, Cuomo alleged.

From Legal Newsline: Reach John O'Brien by e-mail at

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