News

AMD, Intel Settle Antitrust Suit

• By Jeffrey Schwartz
• 11/13/2009

AMD and Intel on Thursday agreed to a legal settlement of most disputes and entered into a five-year cross-patent licensee pact. As part of the agreement, Intel will pay AMD $1.25 billion.

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

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

While Intel has denied such claims, pressure was mounting on the company to react as subsequent complaints were submitted from regulators worldwide. (Just last week, New York Attorney General Andrew Cuomo filed a suit against Intel.)

The settlement between AMD and Intel 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, on a conference call Thursday. "If they ask, we will say that the agreement to a great extent resolves outstanding disputes between AMD and Intel under the antitrust laws."

The key issues maintained by AMD is that Intel was taking punitive actions against dozens of major systems vendors who did business with AMD in the form of delaying shipments or withholding benefits, McCoy contended.

The agreement also prohibits Intel from placing code in compilers that may degrade performance on AMD processors.

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

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

"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."