AMD Files Antitrust Complaint Against Intel In U.S. Federal District Court
SUNNYVALE, Calif. -- June 28, 2005 --AMD (NYSE: AMD) announced today that it
filed an antitrust complaint against Intel Corporation (³Intel²) yesterday
in U.S. federal district court for the district of Delaware under Section 2
of the Sherman Antitrust Act, Sections 4 and 16 of the Clayton Act, and the
California Business and Professions Code. The 48-page complaint explains in
detail how Intel has unlawfully maintained its monopoly in the x86
microprocessor market by engaging in worldwide coercion of customers from
dealing with AMD. It identifies 38 companies that have been victims of
coercion by Intel including large scale computer-makers, small
system-builders, wholesale distributors, and retailers, through seven types
of illegality across three continents.
³Everywhere in the world, customers deserve freedom of choice and the
benefits of innovation and these are being stolen away in the
microprocessor market,² said Hector Ruiz, AMD chairman of the board,
president and chief executive officer. ³Whether through higher prices from
monopoly profits, fewer choices in the marketplace or barriers to innovation
people from Osaka to Frankfurt to Chicago pay the price in cash every day
for Intel¹s monopoly abuses.²
x86 microprocessors run the Microsoft Windows®, Solaris and Linux families
of operating systems. Even Apple®, a pioneer of the PC and one of the
industry¹s enduring innovators, announced that it would switch exclusively
to x86 processors to run Mac OS® software beginning in 2006. Intel¹s share
of this critical market currently counts for about 80 percent of worldwide
sales by unit volume and 90 percent by revenue, giving it entrenched
monopoly ownership and super-dominant market power.
This litigation follows a recent ruling from the Fair Trade Commission of
Japan (JFTC), which found that Intel abused its monopoly power to exclude
fair and open competition, violating Section 3 of Japan¹s Antimonopoly Act.
These findings reveal that Intel deliberately engaged in illegal business
practices to stop AMD¹s increasing market share by imposing limitations on
Japanese PC manufacturers. Intel did not contest these charges.
The European Commission has stated that it is pursuing an investigation
against Intel for similar possible antitrust violations and is cooperating
with the Japanese authorities.
³You don¹t have to take our word for it when it comes to Intel¹s abuses; the
Japanese government condemned Intel for its exclusionary and illegal
misconduct,² said Thomas M. McCoy, AMD executive vice president, legal
affairs and chief administrative officer. ³We encourage regulators around
the world to take a close look at the market failure and consumer harm
Intel¹s business practices are causing in their nations. Intel maintains
illegal monopoly profits at the expense of consumers and computer
manufacturers, whose margins are razor thin. Now is the time for consumers
and the industry worldwide to break free from the abusive Intel monopoly.²
The 48-page complaint, drafted after an intensive investigation by AMD¹s
lead outside counsel, Charles P. Diamond of O¹Melveny & Myers LLP, details
numerous examples of what Diamond describes as ³a pervasive, global scheme
to coerce Intel customers from freely dealing with AMD to the detriment of
customers and consumers worldwide.² According to the complaint, Intel has
unlawfully maintained its monopoly by, among other things:
* Forcing major customers such as Dell, Sony, Toshiba, Gateway, and
Hitachi into Intel-exclusive deals in return for outright cash payments,
discriminatory pricing or marketing subsidies conditioned on the exclusion
of AMD;
o According to industry reports, and as confirmed by the JFTC in
Japan, Intel has paid Dell and Toshiba huge sums not to do business with
AMD.
o Intel paid Sony millions for exclusivity. AMD¹s share of Sony¹s
business went from 23 percent in 02 to 8% in 03, to 0%, where it remains
today.
* Forcing other major customers such as NEC, Acer, and Fujitsu into
partial exclusivity agreements by conditioning rebates, allowances and
market development funds (MDF) on customers¹ agreement to severely limit or
forego entirely purchases from AMD;
o Intel paid NEC several million dollars for caps on NEC¹s
purchases from AMD. Those caps assured Intel at least 90% of NEC¹s business
in Japan and imposed a worldwide cap on the amount of AMD business NEC could
do.
* Establishing a system of discriminatory and retroactive incentives
triggered by purchases at such high levels as to have the intended effect of
denying customers the freedom to purchase any significant volume of
processors from AMD;
o When AMD succeeded in getting on the HP retail roadmap for
mobile computers, and its products sold well, Intel responded by withholding
HP¹s fourth quarter 2004 rebate check and refusing to waive HP¹s failure to
achieve its targeted rebate goal; it allowed HP to make up the shortfall in
succeeding quarters by promising Intel at least 90% of HP¹s mainstream
retail business.
* Threatening retaliation against customers for introducing AMD computer
platforms, particularly in strategic market segments such as commercial
desktop;
o Then-Compaq CEO Michael Capellas said in 2000 that because of
the volume of business given to AMD, Intel withheld delivery of critical
server chips. Saying ³he had a gun to his head,² he told AMD he had to stop
buying.
o According to Gateway executives, their company has paid a high
price for even its limited AMD dealings. They claim that Intel has ³beaten
them into guacamole¹² in retaliation.
* Establishing and enforcing quotas among key retailers such as Best Buy
and Circuit City, effectively requiring them to stock overwhelmingly or
exclusively, Intel computers, artificially limiting consumer choice;
o AMD has been entirely shut out from Media Markt, Europe¹s
largest computer retailer, which accounts for 35 percent of Germany¹s retail
sales.
o Office Depot declined to stock AMD-powered notebooks regardless
of the amount of financial support AMD offered, citing the risk of
retaliation.
* Forcing PC makers and tech partners to boycott AMD product launches or
promotions;
o Then-Intel CEO Craig Barrett threatened Acer¹s Chairman with
³severe consequences² for supporting the AMD Athlon 64 launch. This
coincided with an unexplained delay by Intel in providing $15-20M in market
development funds owed to Acer. Acer withdrew from the launch in September
2003.
* Abusing its market power by forcing on the industry technical
standards and products that have as their main purpose the handicapping of
AMD in the marketplace.
o Intel denied AMD access to the highest level of membership for
the Advanced DRAM technology consortium to limit AMD¹s participation in
critical industry standard decisions that would affect its business.
o Intel designed its compilers, which translate software programs
into machine-readable language, to degrade a program¹s performance if
operated on a computer powered by an AMD microprocessor.
To view the full text of the complaint, please visit
http://www.amd.com/breakfree.
Leading publications such as The Wall Street Journal, The Washington Post,
The Economist, San Jose Mercury News and CNET have recognized AMD as a
leader in microprocessor innovation. AMD has achieved technological
leadership in critical aspects of the x86 market, particularly with its AMD
Opteron microprocessor, the first microprocessor to take x86 computing from
32 to 64 bits, and with its dual-core processors. The company has also
stated its commitment to help deliver basic computing and Internet
connectivity to 50 percent of the world¹s population by the year 2015.
Press and Analyst Conference Call
Hector Ruiz, AMD chairman, president and CEO; Thomas M. McCoy, AMD executive
vice president, legal affairs and chief administrative officer; and Charles
P. Diamond, partner at O¹Melveny & Myers, LLP and AMD¹s lead outside counsel
will discuss the details of the antitrust complaint against Intel at 9:15 AM
PDT today on an audio conference call. Following their remarks, there will
be a question and answer session.
Dial-in number: (651) 291-0618
Code: 786995
Replay number:
(800) 475-6701 in North America
(320) 365-3844 outside the U.S.
Code: 786995
The audio conference will be available live and for 10 days after the
conference call at www.amd.com/breakfreewebcast.
AMD¹s Position on Fair and Open Competition AMD stands for fair and open
competition and the value and variety competition delivers to the
marketplace. Innovative AMD technology allows users to break free to reach
new levels of performance, productivity and creativity. Businesses and
consumers should have the freedom to choose from a range of competitive
products that come from continuous innovation. When market forces work,
consumers have choice and everyone wins. For more information, please visit
http://www.amd.com/breakfree.
About AMD
AMD (NYSE:AMD) designs and produces innovative microprocessors, Flash memory
devices and low-power processor solutions for the computer, communications
and consumer electronics industries. AMD is dedicated to delivering
standards-based, customer-focused solutions for technology users, ranging
from enterprises to government agencies and individual consumers. For more
information, visit www.amd.com.
AMD, the AMD Arrow logo and combinations thereof, are trademarks of Advanced
Micro Devices, Inc. Other names are for informational purposes only and may
be trademarks of their respective owners.
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