Federal Judge Dismisses Some Claims in Intel Case

Intel will be facing fewer claims in its upcoming antitrust lawsuit following a federal judge’s decision Thursday.

The suit, brought by New York’s attorney general, alleges that the California-based business paid billions of dollars in kickbacks to computer manufacturers, and abused its status as the dominant producer of microprocessor chips to stifle competition from its rival, Advance Micro Devices. The attorney general’s office claimed that Intel retaliated against those manufacturers that did business with its competitors. Intel’s behavior, the pleading argued, caused PC buyers to pay more for their computers than they should have.

Judge Leonard Stark, federal judge for the district of Delaware, dismissed some of the claims in the suit, such as those that the attorney general’s office had filed in what it called a “parental” role on behalf of individual computer purchasers. The judge stated that there was no express statutory authority for the state to do so.

These “parental” claims by the New York Attorney General’s Office could have allowed the state to seek not only financial penalties and injunctions for wrongdoing by Intel, but triple damages — similar to those allowed in a class action lawsuit. The company argued, successfully, that the state may seek traditional penalties, but not excessive damages.

The judge also dismissed claims that involved computer purchases prior to November 2006. It stated that Delaware’s three-year time restriction for such cases, rather than New York’s longer statute of limitations should apply in this case, which was initially filed in November 2009.

As part of its showing of the Santa Clara company’s alleged wrongdoing, the attorney general’s office cited emails from the company to support its claims of the kickbacks.

Intel has denied that it has done anything wrong and argued that its payments were part of legitimate pricing discounts.

Computer manufacturer Dell was one such company that received such payments from Intel. The Securities Exchange Commission accused the company of accounting fraud for failing to properly disclose these payments from Intel. In July 2010, Dell agreed to pay $100 million to settle those charges without admitting any wrongdoing.

The case filed by the New York Attorney General is slated for trial on Feb. 14, but it will not be the first legal trouble for the company. The Federal Trade Commission took action against Intel; the company settled that case in August 2010.

Intel also settled a private case filed by AMD for $1.25 billion, and is currently seeking an appeal to a $1.45 billion fine it paid to settle antitrust charges in Europe.

Posted By Justin "JZ" Ziegler
December 11,2011
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