Intel Settles NY Antitrust Case for $6.5 Million

(REUTERS) - Intel Corp agreed to pay $6.5 million to resolve an antitrust lawsuit in which New York's attorney general accused the world's largest chipmaker of threatening computer makers and paying billions of dollars of kickbacks to maintain its market dominance.

The settlement ends a November 2009 Delaware case brought by Andrew Cuomo, then New York's attorney general and now governor. Eric Schneiderman, the current attorney general, took over the case when he succeeded Cuomo in that position.

Intel's $6.5 million payment represents less than five hours of profit for the Santa Clara, California-based company, based on reported net income of $12.94 billion for 2011.

Cuomo had accused Intel of violating state and federal antitrust law through a systematic worldwide campaign to bully customers into buying its personal computer chips, at the expense of rival Advanced Micro Devices Inc.

But the lawsuit lost much of its punch when U.S. District Judge Leonard Stark said the state could not seek triple damages, and was allowed to pursue claims over just three years of computer purchases, not four or six as it had sought.

Jennifer Givner, a spokeswoman for Schneiderman, said the state's lawyers still believe their substantive claims have merit, but that in light of the court's decision believe that no purpose is served by pursuing the matter further.

Intel said it was pleased to settle, and that the accord did not require it to admit to any allegations or violation of law, or make any changes to its business.

We have always said that Intel's business practices are lawful, pro-competitive and beneficial to consumers, General Counsel Doug Melamed said in a statement.

Cuomo had contended that Intel bribed or coerced computer makers such as Dell Inc, Hewlett-Packard Co and International Business Machines Corp, and threatened retaliation.

Emails showed that top Intel officers including Chief Executive Paul Otellini were aware of some of the improper activity, Cuomo alleged.

Intel has long faced allegations of anticompetitive conduct, and is still appealing a 1.06 billion euro (now US$1.41 billion) fine imposed in 2009 by European regulators.

In 2010, the Federal Trade Commission settled a case in which it accused Intel of unlawfully stifling competition in microprocessors.

The same year, a different Delaware federal judge approved a settlement with shareholders that called for Intel to make more than 40 corporate governance changes, including the creation of a compliance committee to monitor antitrust litigation.

And in November 2009, barely a week after Cuomo sued, Intel agreed to pay AMD $1.25 billion to settle all outstanding legal disputes with its smaller rival.

Intel is incorporated in Delaware.

The case is New York v. Intel Corp, U.S. District Court, District of Delaware, No. 09-00827.