Legal challenges mount for Intel

Years after first flaring up in Europe and Asia, the global antitrust cases against Intel are finally threatening to spiral out of control in its own back yard.

New York attorney-general Andrew Cuomo’s complaint against the chipmaker, filed on Wednesday, follows a private antitrust suit brought by arch-rival AMD.

But it could well be only the prelude to a much bigger battle, according to former regulators and legal experts: a full-blown federal government case against the world’s biggest chipmaker, in what would be the most significant case of its kind since the US took on Microsoft a decade ago.

Earlier this year, the Federal Trade Commission, newly constituted by the Obama administration, announced an important change in its approach to antitrust enforcement, promising to take a more stringent line in its application of the Sherman Act, one of the principal planks of antitrust legislation.

The fact that New York State has moved first against Intel may simply reflect the fact that there will be a lag before this new, tougher stance results in a federal case, according to observers.

Mr Cuomo’s investigation began “in the days of the last US administration, which was reluctant to bring cases like these”, said Nicholas Economides, professor of economics at the New York University’s Stern School of Business, who worked on the New York investigation. “It’s very possible the FTC will want to bring a case.”

The cases against Intel, both in New York and around the world, in many ways echo the earlier, successful US complaint against Microsoft. As in the Microsoft case, they accuse a dominant technology supplier of using its power over PC makers to prevent smaller rivals from gaining a foothold.

“It’s vitally important for the FTC to bring its own case,” said David Balto, a former policy director at the agency.

If the federal regulators decide to take on the case, they could open a new front in the global challenge to Intel that goes beyond the issues considered by regulators in other jurisdictions, Mr Balto said. So far, the cases have centred on distribution issues: Intel’s ability to use large discounts and other means to discourage its customers from buying chips from AMD.

The FTC would be more likely to look at broader issues, such as whether Intel’s dominance limits innovation in the chip industry, he added. For instance, Intel faces a complaint from Nvidia, a maker of graphics chips, that its refusal to licence some of its technology has blocked potential rivals from moving into its market.

The timing of Mr Cuomo’s move could also complicate Intel’s defence strategy, both at home and abroad. It has been preparing for its first public defence in court in Delaware next year, when the AMD case is due to be heard.

With a new, high-profile case to defend, it could now find it far harder to prevail in Delaware, said Mr Balto.