Intel Wins Key Ruling in Class-Action Suit

A court-appointed special master has rejected class-action status in an antitrust lawsuit against Intel, determining that the plaintiffs failed to show that PC buyers were harmed by discounts Intel offered to manufacturers.

The complaint, filed in U.S. District Court in Delaware in 2005, consolidates more than 80 separate cases that generally accuse Intel of wrongfully offering discounts to computer manufacturers and causing computer prices to be artificially inflated.

The consolidated complaint mirrors the separate antitrust lawsuit that AMD filed in the same court, presided over by the same judge, U.S. District Court Judge Joseph Farnan. Intel paid US$1.25 billion last November to settle that case, in which it admitted no wrongdoing.

Farnan appointed a “special master” to review claims in the consolidated complaint.

Discounts to manufacturers such as Dell and Hewlett Packard played a central role in both the AMD case and the consolidated complaint. Intel discounts to PC makers effectively caused them to reject use of AMD chips, bolstering Intel’s dominance in the market, complainants argued.

But Special Master Vincent Poppiti’s report , filed Wednesday, supports Intel’s argument that computer manufacturers were free to use Intel’s discounted prices as they saw fit, including passing those discounts onto customers. Poppiti failed to find evidence that the discounts harmed PC buyers.

At times, Poppiti uses strong language in the 112-page report. “Plaintiffs cannot meet their burden with an expert’s general statements about economic theory, and simply throw up their hands when record real-world facts fail to conform to economic theory,” Poppiti wrote.

Unless plaintiffs object within 21 days of Poppiti’s filing, his recommendations will be adapted as the court’s ruling.

Intel business practices, including payments to PC makers, have been the subject of other antitrust actions, notably resulting in a European Commission fine of €1.06 billion (US$1.45 billion) in May last year. Meanwhile, a U.S. Federal Trade Commission case against Intel is expected to conclude in a settlement over the next week.