"Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market," Cuomo said. "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."

The suit says Intel essentially bribed major personal-computer manufacturers by offering huge rebate checks if they agreed to buy chips only from Intel rather than archrival Advanced Micro Devices. But Intel offered not just a carrot to stifle competition but also a stick, according to Cuomo, who said, "Intel also threatened to and did in fact punish computer makers that they perceived to be working too closely with Intel's competitors."

'We Never Threatened Anyone'

Intel threatened to cut off those PC makers from payments, fund the manufacturer's competitors, and cut off joint-development projects, he said.

Intel spokesperson Chuck Molloy vehemently denied Cuomo's allegations. "We never threatened anyone," he told National Public Radio.

The so-called "rebates" to PC makers actually had no legitimate business purpose, Cuomo said, and to make matters worse, Intel attempted to cover its tracks by "eliminating crucial but flagrantly objectionable provisions from written agreements or by camouflaging language about illegal guaranteed market shares with terms like 'volume targets.'"

Dell, HP , IBM Pressured

AMD , which has filed its own suit against Intel, high-fived the lawsuit, crowing, "The New York attorney general's 83-page complaint, filed on behalf of New York State consumers and governmental entities, details explicit evidence of Intel's harm to U.S. consumers and computer manufacturers," according to Tom McCoy, AMD's executive vice president of legal, corporate and public affairs. "Stopping that illegal harm will serve the settled purpose of the American antitrust laws: Ensuring that innovation is unconstrained and competition is free to serve consumers."

Specifically, the lawsuit alleges that in 2006 Dell received almost $2 billion in "rebates," that from 2001 to 2006, Dell agreed not to sell any AMD-based computers, and that Dell and Intel joined forces to sell servers below cost in order to "deprive AMD of strategically important competitive successes." (continued...)

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