• Business Week, Friday, January 11, 2008 11:15 AM

New York Attorney General Andrew Cuomo served Intel and Advanced Micro Devices (AMD) with demands for information as he tries to show that Intel stifled competition and hurt consumers by illegally coercing computer makers to use its chips. Intel did that through rebates, punitive pricing and exclusive contracts that shut out AMD, Cuomo alleges.

The allegations may be hard to prove, given the competitive pricing of Intel's chips. "Predatory pricing and exclusive dealing are a tough case under U.S. law," says John Peirce, a partner at law firm Bryan Cave who specializes in antitrust and commercial litigation. The arrangements are widespread in the U.S., where courts have been loath to intervene except to remedy "egregious" violations, he says.

AMD captured market share from Intel in 2005 and 2006 by beating its larger competitor to a key breakthrough that affected chip speed, but Intel has since improved its technology and recovered share. AMD's argument, however, is that it hasn't made more inroads into Intel's share because of the subsidies Intel pays to computer makers.

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