Advanced Micro Devices Inc. filed an antitrust lawsuit against Intel Corp. yesterday, alleging that the world's largest chipmaker has coerced computer and electronics manufacturers, such as Dell Inc. and Hewlett-Packard Co., into using Intel products.
AMD's suit, filed in the U.S. District Court in Delaware, charges that Intel pushed manufacturers into exclusive or near-exclusive deals by making price cuts and rebates available to manufacturers only if they agreed to limit purchases from AMD.
AMD chief executive Hector Ruiz said in a conference call with journalists and analysts that "Intel is a monopoly, pure and simple, and it's time the industry broke free from its chains. . . . All we want [is] a chance to compete on the merits of our products."
An Intel spokesman, Tom Beermann, disputed AMD's claims about its business practices. "We strongly disagree with AMD's complaint," he said in a statement. "Intel believes in competing fairly and believes consumers are benefiting from this vigorous competition."
Beermann said AMD's lawsuit amounts to "excuses and speculation" about why Intel has been so successful. Intel has about 80 percent of the computer microprocessor market.
In its 48-page filing, AMD's complaint names 38 customers that the company says were strong-armed into making restrictive deals with Intel, including tech giants such as Sony Corp. and Circuit City and other retailers.
The complaint alleges that an executive at computer maker Gateway told AMD he was beaten into "guacamole" by Intel for buying their rival's processors; another passage claims then-Compaq Computer Corp. chief executive Michael D. Capellas told an AMD executive that he "had a gun to his head" and had to stop buying AMD microprocessors.
Capellas is now chief executive at MCI Inc. He did not immediately respond to a message seeking comment that had been left at the telecommunications company.
This is not the first time Intel has come under scrutiny for holding such a dominant share of the processor market: A recent ruling from the Fair Trade Commission of Japan found that Intel violated the anti-monopoly act in that country.
AMD, meanwhile, has long been the underdog in the processor market. In recent tests pitting the latest processors from AMD against the latest chips from Intel, AMD has often fared well in reviews by tech-centric Web sites and publications that specialize in throwing a battery of performance tests at new processor products.
AMD's executive vice president for legal affairs, Thomas M. McCoy, said in a telephone interview yesterday that such successes prove that the company is an innovator.
"We've taken off the table the question of whether we're a whiny competitor," he said. "Where we have the opportunity to get market access for our products, we do well -- where we are locked out, we have zero market share."
Andrew I. Gavil, a law professor at Howard University, said AMD should be able to prove that Intel holds a monopoly, but proving that Intel has abused its monopoly power -- the second step of a successful antitrust case -- may pose more of a challenge.
"There has been a lot of debate -- a lot -- over how to define the line between aggressive competition and predation, or exclusionary conduct," he said.
"It's perfectly lawful to drive somebody out of business if you make a better product," he said. "It is not lawful to push them out of business with means that have more to do with your power than your superiority. . . . The law is not entirely clear in this area, about where you draw the line on what a dominant company can and cannot do."
Jeffrey Shohet, an antitrust attorney with DLA Piper Rudnick Gray Cary, said AMD's claim is "long on hyperbole and drama, but a little short on exact facts that need to be part of the story they need to tell to make a monopoly maintenance claim stick."
IDC analyst Roger L. Kay predicted the case would "reveal some of the seamy underside of the industry." But, like many PC industry analysts, Kay takes a wait-and-see stance on which side will ultimately prevail.
Kay said AMD might have a tough battle on its hands to demonstrate that customers and consumers have been harmed as a result of Intel's actions. "They are really going to have a real smoking-gun type of connection," he said. "I think it's going to be hard to prove that."
Another analyst voiced a similar question. "Am I as a consumer being deprived?" said Martin Reynolds, an analyst at research firm Gartner Inc. "I don't know. It does seem like [AMD's] stuff is out there and it does seem that I can go out and buy it. . . . We need to hear Intel's side of the story."