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AMD outlines antitrust case, seeks trial by end of '06

Advanced Micro Devices Inc. (AMD) hopes to bring its antitrust case against Intel Corp. before a jury by the end of next year and reveal the extent of Intel’s alleged conduct through documents and the testimony of industry insiders, AMD executives said Tuesday.

“Today we ask Intel to cease its abusive behavior and allow market conditions to prevail,” said Hector Ruiz, chairman, president and chief executive officer of AMD, on a conference call for analysts and the media. Earlier on Tuesday, AMD filed a lawsuit in the U.S. District Court for the District of Delaware accusing Intel of coercing hardware vendors and retailers around the world into using Intel’s chips instead of AMD’s with discriminatory pricing, market pressure and intimidation.

Some of these issues have been brought up in the U.S. in the past, but Intel has prevailed, most recently in 1998. This time, however, AMD is in a much better competitive position with the success of its Opteron and Athlon 64 processors and a recent ruling by the Fair Trade Commission of Japan against Intel, Ruiz said. In that case, Intel agreed to end certain behaviors in Japan but did not admit any wrongdoing. The European Commission is also investigating Intel’s business practices in that region.

Even though its market share is growing, AMD would have even more if Intel hadn’t used its market power to lock vendors and system integrators into exclusive contracts, Ruiz said. AMD believes it offers superior technology at better prices than Intel’s products, but charges that Intel is using its monopoly position to block competition, he said.

“We think everyone should focus on where we’re doing well and why, and where we’re not doing well and why,” said Tom McCoy, executive vice president of legal affairs and chief administrative officer at AMD. McCoy will direct AMD’s legal strategy in the coming months.

As might be expected, Intel is prepared to contest AMD’s charges, said Tom Beerman, an Intel spokesman.

“We strongly disagree with AMD’s complaints about the business practices of Intel and Intel’s customers. Intel believes in competing fairly and believes consumers are benefiting from this vigorous competition. AMD has chosen, once again, to complain to a court about Intel’s success with a legal case full of excuses and speculation. Intel will respond appropriately to AMD’s latest complaints and is committed to successfully resolving these issues in court,” said an Intel statement read by Beerman.

In order to win its case, AMD needs to demonstrate that Intel is in possession of monopoly power, and that the company is guilty of abusing that monopoly power to maintain its dominance and harm consumers, McCoy said. In the first quarter of 2005, Intel shipped 81.7 percent of the desktop, server and notebook processors based on the x86 instruction set that both companies use to run their processors, according to data from Mercury Research Inc.

AMD is entitled to seek damages under the Clayton Act, said Chuck Diamond, senior litigation partner with O’Melveny and Myers LLP and AMD’s lead outside counsel. However, “this is not about money. This is about breaking open the market. This is about allowing our customers to bring their customers the best products that fit their needs at the best prices,” he said.

Diamond declined to comment on whether AMD would seek an injunction against Intel as part of its legal strategy. He noted that the U.S. Department of Justice was able to bring its antitrust case against Microsoft Corp. to trial in less than 18 months, and AMD hopes to follow a similar time line, putting a trial on course for the end of 2006, he said.

AMD has sent discovery retention notices to the 38 companies listed in its complaint, requiring them to keep documents related to this case, said Mike Simonoff, an AMD spokesman. So far, AMD has built its case on discussions with industry partners, he said.

“The allegations and the claims in this case are all taken from information based on conversations between people at AMD and those in the rest of the IT industry. We will find evidence that backs the claims once we find documents and people take the [witness] stand,” Simonoff said.

AMD’s stock (AMD) was up US$0.60, or 3.6 percent, to $17.25 on the New York Stock Exchange Tuesday afternoon. Intel’s stock (INTC) was also up $0.37 to trade at $26.23 on the Nasdaq market.

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