Think Tank Blasts Cuomo's Witch Hunt Against Intel

Antitrust Lawsuit Threatens Innovation, Consumers

By Clyde Wayne Crews [1], Ryan Radia [2]

November 04, 2009

Contacts:
Ryan Radia, 202-331-2281
Christine Hall, 202-331-2258

WASHINGTON, D.C., November 4, 2009 – Today New York State Attorney General Andrew Cuomo filed a federal antitrust lawsuit [3] against Intel Corporation. The suit, which accuses Intel of violating antitrust laws through “coercion” and “bullying,” comes amidst an ongoing competition policy battle between Intel and the European Union over a record-shattering $1.5 billion fine that the EU levied against [4] Intel earlier this year.

Competition policy analysts at the Competitive Enterprise Institute [5], a Washington, D.C.-based public interest group, were sharply critical of the lawsuit.

"Mr. Cuomo’s suit is just the latest example of the New York Attorney General using his authority [6] to make headlines at consumers’ expense. This baseless attack against Intel will only delay innovation in the computer chip market,” argued Ryan Radia [7], Associate Director of Technology Studies.

“Few markets are as vibrant and innovative as the processor market,” Radia stated. “During the very period that Mr. Cuomo alleges Intel was engaged in ‘anti-competitive’ behavior, desktop computer processors more than doubled in performance per dollar [8]every two years. By objective measures, the performance of the processor market has been nothing short of spectacular.”

“Mr. Cuomo’s suit rests on the fundamentally flawed assumption that Intel’s high market share is indicative of market control. In fact, Intel and archrival AMD have been competing fiercely [9] for over a decade, and both firms continue to invest billions of dollars [10] each year in researching and developing faster, more efficient chips,” Radia observed.

"Intel’s pricing and rebate policies are legitimate, pro-consumer business practices in a vibrant market setting,” said Wayne Crews [11], Vice President for Policy. “Intel is disciplined not only by its competitors but by downstream business customers like Dell and Hewlett-Packard. Ironically, the only barriers to computer makers ganging up against Intel are antitrust laws themselves,” Crews pointed out. “Antitrust laws steer markets in unnatural directions [12], thwarting the evolution of commerce and creating instabilities in entire sectors.”

“Abusive monopoly power is supposed to result in a reduction of quantity sold and an increase in prices,” said Crews. “Yet the exact opposite phenomenon has occurred in the processor marketplace. In the dynamic high-tech sector, firms can sustain market share only through perpetual innovation.”

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CEI is a non-profit, non-partisan public interest group that studies the intersection of regulation, risk, and markets. For more information about CEI, please visit our website at www.cei.org [13].