AMD, Intel settle antitrust suit

Advanced Micro Devices and Intel agreed Nov. 12 to a legal settlement of most of their disputes and entered into a five-year cross-patent licensee pact. As part of the agreement, Intel will pay AMD $1.25 billion.

The companies’ agreement to resolve their four-year antitrust suit promises to boost competition in the server and price-sensitive PC markets.

AMD filed the suit in June 2005. Among other things, the company accused Intel of a long-standing practice of coercing PC makers to take punitive action against vendors that do business with AMD.

Although Intel has denied such claims, subsequent complaints submitted by regulators worldwide was adding pressure on the company to address the accusations. Just last week, New York State Attorney General Andrew Cuomo filed a suit against Intel.

The settlement doesn't resolve those suits, though AMD said it would support their withdrawal.

"From our perspective, we are withdrawing all pending litigation, all complaints that have been launched with regulatory agencies," said Tom McCoy, AMD's executive vice president for legal, corporate and public affairs, during a conference call Nov. 12. "If they ask, we will say that the agreement to a great extent resolves outstanding disputes between AMD and Intel under the antitrust laws."

AMD’s key issue was that Intel was taking punitive action against dozens of major systems vendors who did business with AMD in the form of delayed shipments or withheld benefits, McCoy said.

In addition, the agreement prohibits Intel from placing code in compilers that could degrade performance on AMD processors.

"We were never looking for any help," McCoy said. “We are just not looking to be unfairly hurt.”

It remains to be seen whether the move will force Intel to reduce or eliminate rebates to its channel partners, said Paul DeGroot, an analyst at Directions on Microsoft.

"I'd say that consumers may be the biggest winners here as this rebalances the hardware market a bit and creates better competition," DeGroot said. "Partners who were getting rebates from Intel may find the company less generous in the future, but partners who didn't may find that they have better products to sell at lower (or at least, no higher) prices, which should be good for business, particularly as we crawl off the bottom of the recession."

About the Author

Jeffrey Schwartz is executive editor of Redmond Channel Partner and an editor-at-large at Redmond magazine, affiliate publications of Government Computer News.


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