Law and Technology
intel’s rebates: Above
Board or Below the Belt?
OVer A fiVe-yeAr period, Dell allegedly received pay- ments from Intel averag- ing $300 million per quar- ter.a The Attorney General
of the State of New York, Andrew M.
Cuomo, accuses the Santa Clara-based
chip firm of making these payments
to force its OEM customer not to use
AMD’s x86 CPUs in its computers, in
violation of antitrust law. Intel is alleged to have infringed Section 2 of the
Sherman Act, which opposes behavior
by firms aimed at creating or preserving a monopoly other than by merit.
In December 2009, the Federal Trade
Commission also filed suit against Intel.b The FTC accuses the chip maker
of numerous anticompetitive unfair
practices, including various payments to its customers in the form of
lump sums or discounts.
PHo TogRAPH by JAE C. Hong, FILE/AP PHo To
In Europe, the case is closed, or almost. The billions of dollars that Intel paid to Dell, HP, and several other
firms were deemed anticompetitive
behavior. The European Commission
found that the payments amounted
to a strategy to exclude AMD from the
microprocessor market. They were
considered akin to rebates and re-
a netbook equipped with an intel atom processor is demonstrated at the international
consumer electronics show in Las Vegas in 2009.
strictions imposed on buyers, which
are incompatible with European an-
titrust law. The Commission found
against Intel in May 2009 and fined
the firm almost $2 billion.c So, in-
stead of going to its customers, Intel’s
money replenished the coffers of the
European Union! Intel immediately
appealed to the EU Court of First In-
stance in Luxembourg. It also signed
a $1.25 billion settlement agreement
with Dell to put an end to its antitrust
and patent allegations.
a Complaint by Attorney General of the State of
New York, Andrew M. Cuomo against Intel Corporation before the United States District Court
for the District of Delaware, November 4, 2009.
b Administrative complaint of the U.S. FTC
against Intel Corporation, docket No. 9341,
December 14, 2009.
c European Commission’s decision against Intel Corp., case COMP/37.990, May 13, 2009.
The story told by the plaintiff State of
New York and by the European Commission can be summed up as follows.
Intel and AMD are practically the only
manufacturers of x86 CPUs, the micro-