Intel Accused of Giving Dell $6 Billion for Exclusivity

Intel Faces New Lawsuits from New York State

by Anton Shilov
11/04/2009 | 08:03 PM

The state of New York has filed a lawsuit against Intel Corp. accusing the chip giant of paying billions of dollars to computer makers in order to discourage them from using microprocessors by Advanced Micro Devices. Dell alone allegedly received $6 billion dollars between 2002 and 2007 and sometimes those payments exceeded Dell’s profits.

 

The lawsuit alleges Intel paid computer makers, including IBM and HP, to discourage them from utilizing microprocessors produced by Intel’s arch-rival AMD, reports Dow Jones Newswires. For example, as a part of the agreement, Intel compensated below-cost bids against rivals offering AMD-based desktops, servers or workstations by Dell in order to slowdown the increase of AMD’s market share. 

Under a secret pact named the "Mother of all Programs", Intel paid Dell a rebate based on the total cost of central processing units the computer maker bought, the lawsuit claims. The percentage of the rebate could fluctuate, but reached up to 16% as Dell mulled over using AMD processors. Moreover, in one fiscal quarter Intel’s payments constituted 116% of Dell's reported net income, according to the lawsuit.

Intel has already faced similar lawsuits in Europe, Japan, South Korea and the U.S., therefore, the current accusations hardly change the situation drastically.

Dell, HP and Dell declined to comment, but Intel added that it would defend itself. IBM said it would co-operate with the investigation.