New York Attorney General Andrew Cuomo, following the lead of foreign regulators and in a move that may prompt action from the federal government, has filed an antitrust suit against leading computer-chip maker Intel.

Cuomo claims Intel threatened computer makers and paid huge bribes to insure that they would use Intel products over those of rival Advanced Micro Devices. Cuomo said in a statement. "Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market."

Cuomo alleges, in a federal suit filed in Delaware Federal Court, that Intel paid kickbacks to such computer makers as Hewlett-Packard in the form of rebates to maintain its position as the dominant chip maker. The lawsuit claims Intel violated state and federal antitrust laws.

Intel spokesman Chuck Mulloy rejected Cuomo's allegations and said the Santa Clara, California-based company would defend itself. "Neither customers who have benefited from lower prices and increased innovation, nor justice are being served by the decision to file a case now," he told Reuters.

Cuomo is not the first regulator to go after Intel for the company’s monopolistic behavior. EU regulators fined the company a record $1.45 billion in May for antitrust violations. Intel is appealing that ruling. Asian regulators have filed similar suits.

Japanese regulators determined in 2005 that the chip maker had violated that country’s antitrust laws. South Korean regulators have made a similar determination.

Cuomo alleges that Intel:

• Paid Dell almost $2 billion in “rebates” in 2006, and from 2001 to 2006 granted Dell a favored status among other computer makers. In return, Dell agreed not to market any products from AMD.
• Threatened that it would derail a key server business HP was developing if the world’s largest computer maker promoted AMD products.
• Paid IBM $130 million not to launch an AMD-based server product.

But the case could hinge on whether what Cuomo calls bribes were really bribes, or loyalty discounts. And whether those loyalty discounts amounted to contracts that excluded computer makers from using others’ products, or whether they amounted to predatory pricing, said Columbia Law School Associate Professor C. Scott Hemphill. If they’re called predatory pricing, it would be much harder to prove Intel was acting as a monopolist, because Cuomo would have to prove Intel lost money on the deals. If they are considered exclusionary contracts, that might leave an opening to prove Intel was being anti-competitive, but the law is not settled.

“The main charge brought, loyalty discounts, is notoriously unsettled,” Hemphill said, and that could set up a fight that would go all the way to the Supreme Court. “There may be some thinking on this case on whether this is an attractive set of facts for getting a Supreme Court ruling.”

Meanwhile, because Intel has already been dealing with antitrust issues in Europe and elsewhere, the company may already become overly preoccupied with the suits, thus damaging the company. That’s what many think happened to Microsoft when it battled antitrust suits in the 1990s.

“I think it’s really hard to say. Intel has for a long time been aware of this dominant status in the market,” Hemphill said. “I think you often find that defendants in antitrust cases pull back.”

The New York attorney general claims he has internal documents and email from inside the world’s biggest chip maker, based in Santa Clara, California, that document the company’s monopolistic behavior. The EU also used internal documents when it determined that Intel had violated European antitrust rules.

“Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices. These illegal tactics must stop and competition must be restored to this vital marketplace,” Cuomo said.