Intel Wins Dismissal of Foreign Antitrust Claims

Intel Corp. cannot be sued in the United States for its alleged interference with a rival's business dealings in Germany and Asia, a federal judge in Delaware has ruled.

U.S. District Judge Joseph J. Farnan dismissed all the Sherman Act claims by Advanced Micro Devices Inc. (AMD) against Intel Corp. that involve activities outside the United States. AMD's microprocessors are manufactured in Germany and assembled into PCs in Malaysia, Singapore and China.

The Sherman Act and Monopolies Explained

During the 1800s, the U.S. began experiencing issues with what became known as "monopolies." A monopoly occurs when a group of companies in a particular industry (such as oil, sugar or even the railroad industry) attempts to control the market by driving out competition, hence dominating the supply of a product or service and thereby artificially driving up market prices. Less competition meant higher prices for all consumers.

Congress had to act quickly to solve this problem, post-Civil War. In 1890, the government passed the Sherman Anti-Trust Act. The Act prohibited trusts and monopolies of any kind from forming and provided huge civil and potential criminal penalties for offenders. By 1914, Congress provided more teeth to the Act by adding the Federal Trade Commission Act (FTC) and the Clayton Act.

Today, all three laws work in conjunction to help prevent unfair trade and business practices. More recently, we've seen the laws at work in cases against Comcast-Time Warner, AT&T and Microsoft.

Procedural Background

AMD filed suit in the U.S. District Court for the District of Delaware, alleging Intel is trying to monopolize the worldwide market for the computer chips that runs Windows-based personal computers, known as x86 microprocessors.

Intel has forced its customers into exclusive deals that prevent them from purchasing AMD's products and threatened to retaliate against customers who do buy from AMD, the lawsuit alleged.

Intel moved to dismiss all claims that involved foreign conduct, arguing that such activities did not have an effect within the United States and that the District Court therefore lacked jurisdiction to hear the case.

The Foreign Trade Antitrust Improvements Act of 1982 states that U.S. antitrust law does not apply to overseas conduct unless that conduct has a "direct, substantial and reasonably foreseeable effect" on U.S. commerce.

AMD countered that x86 microprocessors constitute a single worldwide market and that Intel's foreign activities and the alleged harm they caused are "inextricably" tied to the company's domestic conduct and its effects.

In short, Intel's actions "neutered" AMD and made it less able to compete domestically, the company argued.
Judge Farnan agreed with Intel's position and dismissed the foreign claims.

"While the court understands the nature of a global market," the judge said, "the allegations of foreign conduct here result in nothing more than what courts have termed a 'ripple effect' on the United States domestic market, and the FTAIA prevents the Sherman Act from reaching such 'ripple effects.'"

In re Intel Corp. Microprocessor Antitrust Litigation; Advanced Micro Devices Inc. et al. v. Intel Corp. et al., No. 05-441-JJF, 2006 WL 2742297 (D. Del. Sept. 26, 2006).
Computer & Internet Litigation Reporter
Volume 24, Issue 10
10/05/2006