Free Motion for Leave to File - District Court of Delaware - Delaware

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 1 of 126

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

IN RE INTEL CORP. MICROPROCESSOR LITIGATION This Pleading Pertains to:

MDL Docket No. 05-1717-JJF

JIM KIDWELL, MARY REEDER, JOHN Case No. 05-470-JJF MAITA, JWRE, INC., CHRYSTAL MOELLER, and CARESSE HARMS, on their own behalves and on behalf of all others similarly situated, Plaintiffs, vs. INTEL CORPORATION, CORPORATION, A DELAWARE

Defendant. ROBERT J. RAINWATER, KATHY ANN Case No. 05-473-JJF CHAPMAN, and SONIA YACO, on their own behalves and on behalf of all others similarly situated, Plaintiffs, vs. INTEL CORPORATION, CORPORATION, A DELAWARE

Defendant. Additional captions continue on following pages

THE NATIONAL PLAINTIFFS GROUP'S CONSOLIDATED COMPLAINT

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 2 of 126

RYAN JAMES VOLDEN, CHARLES DUPRAZ, VANESSA Z. DEGEORGE, MELISSA GOEKE, JAMES R. CONLEY, NANCY BJORK, TOM KIDWELL, and JEFF VAUGHT, on their own behalves and on behalf of all others similarly situated, Plaintiffs, vs. INTEL CORPORATION, CORPORATION, A DELAWARE

Case No. 05-488-JJF

Defendant. FICOR ACQUISITION CO., LLC, d/b/a MILLS & Case No. 05-515-JJF GREER SPORTING GOODS, RICHARD CAPLAN, MARIA PILAR SALGADO, PAULA NARDELLA, NANCY WOLFE, LESLIE MARCH, TOM HOBBS, ANDREW MARCUS, and VIRGINIA DEERING, on their own behalves and on behalf of all others similarly situated, Plaintiffs, vs. INTEL CORPORATION, CORPORATION, A DELAWARE

Defendant. BILL RICHARDS, CARL YAMAGUCHI, and RON TERRANOVA on their own behalves and on behalf of all others similarly situated, Plaintiffs, vs. INTEL CORPORATION, CORPORATION, A DELAWARE Case No. 05-672-JJF

Defendant.

-2

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 3 of 126

DAVID KURZMAN, on behalf of himself and all others similarly situated, Plaintiff, vs. INTEL CORPORATION, CORPORATION, A DELAWARE

Case No. 05-710-JJF

Defendant. GIACOBBE-FRITZ FINE ART LLC, on its own Case No. 05-846-JJF behalf and on behalf of all others similarly situated, Plaintiff, vs. INTEL CORPORATION, CORPORATION, A DELAWARE

Defendant. THE NATIONAL PLAINTIFFS GROUP'S CONSOLIDATED COMPLAINT I. INTRODUCTION 1. This Master Consolidated Amended Class Action Complaint (the "Complaint")

consolidates seven separate actions and asserts separate class action claims arising under the laws of 24 states and is brought by plaintiffs residing, respectively, in the states of Arizona, Florida, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, South Dakota, Tennessee, Vermont, Washington, D.C., West Virginia, and Wisconsin (collectively "Plaintiffs"). 2. Plaintiffs Jim Kidwell (Arizona), Maria Pilar Salgado (Florida), Carl Yamaguchi

(Hawaii), Ryan James Volden (Iowa), Jeff Vaught (Kansas), Tom Kidwell (Kansas), Leslie -3

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 4 of 126

March (Louisiana), Melissa Goeke (Maine), David Kurzman (Massachusetts), Paula Nardella (Massachusetts), Robert J. Rainwater (Michigan), Kathy Ann Chapman (Minnesota), Bill Richards (Mississippi), Chrystal Moeller (Nebraska), Caresse Harms (Nebraska), JWRE, Inc. (Nebraska), Ron Terranova (Nevada), John Maita (New Jersey), Giacobbe-Fritz Fine Art LLC (New Mexico) Andrew Marcus (New York), Vanessa Z. DeGeorge (North Carolina), James R. Conley (North Dakota), Nancy Bjork (North Dakota), Charles Dupraz (South Dakota), Tom Hobbs (Tennessee), Ficor Acquisition Co., LLC, dba Mills & Greer Sporting Goods (Vermont), Richard Caplan (Washington, D.C.), Virginia Deering (West Virginia), and Sonia Yaco (Wisconsin), bring these claims on behalf of themselves, on behalf of classes of indirect purchasers of Intel x86 Microprocessor Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution, and on behalf of individual classes of consumers residing in each of their respective states (the "Classes"), alleging claims against Defendant Intel Corporation ("Intel" or "Defendant"), under the Sherman Act, 15 U.S.C. § 1, et seq; the Clayton Act, 15 U.S.C. §§ 15 and 16; and the various state antitrust and consumer protection/unfair and deceptive trade practices statutes; and the respective common law of each of these states. The allegations of this Complaint are based upon the personal knowledge of each of the plaintiffs named herein (collectively, "Plaintiffs") as to themselves and their own actions, and upon information and belief as to all other matters, formed after an inquiry reasonable under the circumstances, including a review of the complaint filed against defendant Intel Corporation by Advanced Micro Devices, Inc. ("AMD"). 3. This is a civil antitrust action seeking treble damages, injunctive relief, and

attorneys' fees due to violations by Defendant and others, as alleged herein, of federal antitrust law, Section 2 of the Sherman Act, 15 U.S.C. §2, and state antitrust and unfair and deceptive

-4

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 5 of 126

trade practices acts. Plaintiffs also seek full restitution or disgorgement of all revenues, earnings, profits, compensation, and benefits obtained by Defendant as a result of its unlawful, unfair, or fraudulent business acts or practices alleged herein. 4. Intel holds a monopoly in microprocessors that run the Microsoft Windows and

Linux families of operating systems (hereinafter the "x86 Microprocessor Market" or "x86 Microprocessor Chips"). Intel possesses market power, with its microprocessor revenues

accounting for approximately 90% of the worldwide total dollar of microprocessor sales (and 80% of the microprocessor units sold). 5. According to AMD, for over a decade, Intel has unlawfully maintained its

microprocessor monopoly by engaging in a relentless, worldwide campaign to coerce customers to refrain from dealing with its competitors. Among other things, Intel has forced major customers into exclusive or near-exclusive deals; Intel has conditioned rebates, allowances, and market development funding on its customers' agreement to severely limit or forego entirely purchases from Intel's competitors; Intel has established a system of discriminatory, retroactive, first-dollar rebates triggered by purchases at such high levels as to have the practical and intended effect of denying its customers the freedom to purchase any significant volume of processors from Intel's competitors; Intel has threatened retaliation against customers particularly in strategic market segments; Intel has established and enforced quotas among key retailers effectively requiring them to stock overwhelmingly, if not exclusively, Intel-powered computers, thereby artificially limiting consumer choice; Intel has forced PC makers and technology partners to boycott Intel's competitors' product launches and promotions; and Intel has abused its market power by forcing the industry technical standards and products in a manner which has, as its central purpose, the handicapping of its competitors in the marketplace.

-5

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 6 of 126

6.

Intel's economic coercion of customers extends to all levels -- from large

computer-makers like Hewlett-Packard and IBM, to small system-builders, to wholesale distributors, to retailers such as Circuit City. All face the same choice: accept conditions that exclude Intel's competitors, or suffer discriminatory pricing and competitively crippling treatment. In this way, Intel has avoided competition on the merits and has deprived its

competitors the opportunity to compete against Intel for every potential microprocessor sale. 7. Intel's conduct has become increasingly egregious over the past several years, as

AMD, Intel's biggest competitor, has achieved technological leadership in critical aspects of microprocessor architecture. In April 2003, AMD introduced its Opteron microprocessor, the first microprocessor to take x86 computing from 32 bits to 64 bits -- an advance that allows computer applications to address exponentially more memory, thereby increasing performance and enabling features not possible with 32 bit operation. Unlike Intel's 64-bit architecture of the time (Ithanium), the AMD Opteron -- as well as its subsequently-introduced desktop cousin, the AMD Athlon64 -- offers backward compatibility, allowing PC users to continue using 32-bit software as, over time, they upgrade their hardware. Bested in a technology duel over which it long claimed leadership, Intel increased exploitation of its market power to pressure customers to refrain from migrating to AMD's superior, lower-cost microprocessors. 8. Intel's conduct has unfairly and artificially capped its competitors' market share,

and constrained its competitors from expanding to reach the minimum efficient levels of scale necessary to compete with Intel as a predominant supplier to major customers. As a result, computer manufacturers continue to buy most of their requirements from Intel, continue to pay monopoly prices, continue to be exposed to Intel's economic coercion, and continue to submit to

-6

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 7 of 126

artificial limits Intel places on their purchases from Intel's competitors. With opportunity to compete thus constrained, the cycle continues, and Intel continues to enjoy monopoly profits. 9. Consumers, including Plaintiffs and the other members of the Classes, have been

damaged by Intel's unlawful conduct in the form of inflated prices for personal computers (PCs) and other products containing microprocessors resulting from Intel's raising and fixing of the prices of its microprocessor chips incorporated therein, and the loss of freedom to purchase computer products and other products that best fit their needs. 10. The Japanese Government recognized these competitive harms resulting from

Intel's wrongful conduct, when on March 8, 2005, its Fair Trade Commission (the "JFTC") recommended that Intel be sanctioned for its exclusionary misconduct directed at AMD. Intel did not contest the charges. II. JURISDICTION 11. This action is brought under Section 16 of the Clayton Act, 15 U.S.C. § 26, for

injunctive and equitable relief to remedy Defendant's violations of federal antitrust laws, particularly Section 2 of the Sherman Antitrust Act, 15 U.S.C. § 2. The Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1331 and 1337(a) and 15 U.S.C. § 26. This Court has supplemental jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367. 12. §1332(d). III. VENUE 13. Venue is proper in this judicial district pursuant to 15 U.S.C. § 22 and 28 U.S.C. § This Court has original jurisdiction over this action pursuant to 28 U.S.C.

1391(b) as the acts upon which this action is based occurred in part in this judicial district. Defendant received substantial compensation and profits from sales of Intel x86 Microprocessor

-7

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 8 of 126

Chips in this judicial district and, thus, Defendant's liability arose in part in this district. Moreover, a substantial portion of the affected trade and commerce described below has been carried out in this District. 14. The illegal monopolization and attempt to monopolize the market for x86

Microprocessor Chips as alleged herein, have substantially affected interstate and foreign commerce. IV. PARTIES Plaintiffs 15. Plaintiff Jim Kidwell is a resident of Glendale, Arizona who purchased a Dell

computer containing an Intel microprocessor chip in approximately December, 2004. 16. Plaintiff Maria Pilar Salgado is a resident of Dade, Florida who purchased an HP

Compaq Presario 2200 Notebook computer containing an Intel Celeron M 350 (1.3 GHz) microprocessor chip on January 14, 2005. 17. Plaintiff Carl Yamaguchi is a resident of Waipahu, Hawaii who purchased a Dell

Dimension 4300 computer containing an Intel Pentium 4 Processor on November 11, 2001. 18. Plaintiff Ryan James Volden is a resident of Cedar Rapids, Iowa who purchased a

Dell Dimension 8400 computer containing an Intel microprocessor chip in October, 2004. 19. Plaintiff Tom Kidwell is a resident of Kansas who purchased a personal computer

containing an Intel microprocessor chip within the past two years. 20. Plaintiff Jeff Vaught is a resident of Shawnee, Kansas who purchased a Gateway,

Model 7400P computer containing an Intel microprocessor chip in July, 2003. 21. Plaintiff Leslie March is a resident of Mandeville, Louisiana who purchased an

HP Pavilion a630n computer containing an Intel Pentium (R) 4 CPU in July or August, 2004.

-8

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 9 of 126

22.

Plaintiff Melissa Goeke is a resident of Rockland, Maine who purchased a

Toshiba Satellite Notebook computer containing an Intel Pentium 4 chip on December 31, 2004. 23. Plaintiff David Kurzman is a resident of Sharon, Massachusetts who purchased a

computer containing an Intel X86 processor during the period of time relevant to this action. 24. Plaintiff Paula Nardella is a resident of Wakefield, Massachusetts who purchased

a Dell computer containing an Intel microprocessor chip on January 15, 2002. 25. Plaintiff Robert J. Rainwater is a resident of Battle Creek, Michigan who

purchased a Dell 6000D computer containing and Intel microprocessor chip in May, 2005. 26. Kathy Ann Chapman is a resident of Hastings, Minnesota who purchased a Dell

Dimension 4550 Series containing an Intel Pentium 4 Processor on April 7, 2003. 27. Plaintiff Bill Richards is a resident of Byhalia, Mississippi who purchased a

computer with a Balance CPU containing an Intel microprocessor on March 29, 2005. 28. Plaintiff Chrystal Moeller is a resident of Grand Island, Nebraska and purchased a

Gateway computer containing an Intel Pentium 4 microprocessor chip in December, 2004. 29. Plaintiff Caresse Harms is a resident of Grand Island, Nebraska and purchased a

Gateway computer containing an Intel Pentium 4 microprocessor chip in 2001. 30. Plaintiff JWRE, Inc. is a Virginia corporation with a principal place of business in

Lancaster County, Nebraska. JWRE, Inc. purchased a Dell Dimension 4300 S Series computer containing an Intel Pentium 4 microprocessor chip on January 11, 2002. 31. Plaintiff Ron Terranova is a resident of Las Vegas, Nevada who purchased a

Toshiba Protégé M200 Tablet PC containing an Intel microprocessor in 2004. 32. Plaintiff John Maita is a resident of Clifton, New Jersey and purchased a Dell

computer containing an Intel microprocessor chip within the previous two years.

-9

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 10 of 126

33.

Plaintiff Giacobbe-Fritz Fine Art LLC is a New Mexico corporation,

headquartered in Santa Fe, New Mexico. Giacobbe-Fritz Fine Art LLC purchased two Dell computers containing Intel microprocessor chips in June, 2005. 34. Plaintiff Andrew Marcus is a resident of New York, New York who purchased a

Dell computer containing an Intel microprocessor chip in 2004. 35. Plaintiff Vanessa Z. DeGeorge is a resident of Charlotte, North Carolina who

purchased a Dell Dimension 4700 computer containing an Intel Pentium 4 Processor in April, 2005. 36. Plaintiff James R. Conley is a resident of Bismarck, North Dakota who purchased

a Dell Inspiron 9100 computer containing an Intel microprocessor chip on August 19, 2004. 37. Plaintiff Nancy Bjork is a resident of Minot, North Dakota who purchased a Dell

computer containing an Intel microprocessor chip on May 23, 2002. 38. Plaintiff Charles Dupraz is a resident of Aurora, South Dakota who purchased a

computer containing an Intel Celeron processor in 2001. 39. Plaintiff Tom Hobbs is a resident of Signal Mountain, Tennessee who purchased a

Compaq 2700 computer containing an Intel microprocessor chip in 2002. 40. Plaintiff Ficor Acquisition Co., LLC, d/b/a Mills & Greer Sporting Goods ("Ficor

Acquisition") is a Vermont corporation with its headquarters in Burlington, Vermont. During the Relevant Time Period, Ficor Acquisition purchased at least one computer containing an Intel microprocessor chip. 41. Plaintiff Richard Caplan is a resident of Washington, DC who purchased a

computer containing an Intel microprocessor chip in August, 2004.

- 10

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 11 of 126

42.

Sonia Yaco is a resident of Madison, Wisconsin who purchased a Dell Inspiron

9100 computer containing an Intel microprocessor chip in August, 2004. 43. Plaintiff Virginia Deering is a resident of Berkeley Springs, West Virginia who

purchased a Dell computer containing an Intel microprocessor chip in August, 2004. Defendant 44. Defendant Intel Corporation is a Delaware corporation with its principal offices in

Santa Clara, California. At all times relevant hereto, Intel was engaged, either individually or with others, in the business of manufacturing, marketing or selling Intel x86 Microprocessor Chips to the public throughout the United States. V. CLASS ACTION ALLEGATIONS 45. Plaintiffs bring this action as a class action pursuant to Rules 23(b)(2) and

23(b)(3) of the Federal Rules of Civil Procedure, on their own behalves and on behalf of all other members of a Class consisting of all persons or entities throughout the United States who purchased Intel x86 Microprocessor Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution during the Relevant Time Period (the "Class"). Plaintiffs further respectively seek to represent twenty six (26) state-delimited

subclasses defined as follows: a. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Arizona (the "Arizona Subclass"); b. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Florida (the "Florida Subclass");

- 11

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 12 of 126

c.

Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Hawaii (the "Hawaii Subclass"); d. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Iowa (the "Iowa Subclass"); e. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Louisiana (the "Louisiana Subclass"); f. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Maine (the "Maine Subclass"); g. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Massachusetts (the "Massachusetts Subclass"); h. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Michigan (the "Michigan Subclass"); i. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Minnesota (the "Minnesota Subclass"); j. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for

- 12

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 13 of 126

resale or distribution in Mississippi (the "Mississippi Subclass"); k. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Nebraska (the "Nebraska Subclass"); l. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Nevada (the "Nevada Subclass"); m. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in New Jersey (the "New Jersey Subclass"); n. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in New Mexico (the "New Mexico Subclass"); o. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in New York (the "New York Subclass"); p. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in North Carolina (the "North Carolina Subclass"); q. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in North Dakota (the "North Dakota Subclass"); r. Those Class members who purchased Intel x86 Microprocessor

- 13

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 14 of 126

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in South Dakota (the "South Dakota Subclass"); s. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Tennessee (the "Tennessee Subclass"); t. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Vermont (the "Vermont Subclass"); u. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Washington, D.C. (the "Washington, D.C. Subclass"); v. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in West Virginia (the "West Virginia Subclass"); and w. Those Class members who purchased Intel x86 Microprocessor

Chips or any product containing an Intel x86 Microprocessor Chip other than for resale or distribution in Wisconsin (the "Wisconsin Subclass") (collectively, the "Subclasses"). Excluded from the Class and Subclasses are Defendant and its co-conspirators, its subsidiaries, affiliates, officers, employees, and governmental entities. 46. The Class is so numerous that joinder of all members is impracticable. There are

hundreds of thousands of members of the Class who are geographically dispersed throughout the United States.

- 14

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 15 of 126

47.

Plaintiffs' claims are typical of the claims of the other members of the Class ­

and, respectively, of the claims of each of the Subclasses they respectively seek to represent ­ because Plaintiffs and all other Class members were injured by the same wrongful conduct of the Defendant alleged herein. 48. There are questions of law and fact common to the Class and/or the Subclasses

which predominate over any questions affecting only individual Class members. Such common questions include: a. b. c. Whether Intel sold x86 Microprocessor Chips in the United States during the Relevant Time Period; Whether Intel violated Section 2 of the Sherman Act, 15 U.S.C. §2; Whether Intel was unjustly enriched by selling its x86 Microprocessor Chips at high prices because its unlawful conduct prevented competitors from selling competing products at lower prices; Whether members of the Class and/or the Subclasses have been damaged and, if so, the extent of such damages; Whether the alleged conduct violated the antitrust and unfair and deceptive trade practices acts of Arizona, Florida, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, South Dakota, Tennessee, Vermont, Washington, D.C., West Virginia, and Wisconsin; Whether Plaintiffs and the other members of the Class and/or Subclasses are entitled to restitution and the appropriate measure of such restitution; and Whether Plaintiffs and the other members of the Class and/or Subclasses are entitled to declaratory or injunctive relief or an order requiring disgorgement of all ill-gotten monies.

d. e.

f.

g.

49.

As Plaintiffs' claims are typical of the claims of the other Class members ­ and

respectively on behalf of the Subclasses ­ and because Plaintiffs have no interests adverse to or

- 15

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 16 of 126

which irreconcilably conflict with the interests of other members of the Class or Subclasses, Plaintiffs are adequate class representatives. 50. Plaintiffs will fairly and adequately protect the interests of the Class and/or the

Subclasses and have retained counsel experienced and competent in the prosecution of complex class action litigation. 51. A class action is superior to other available methods for the fair and efficient

adjudication of the controversy and substantial benefits will derive from proceeding as a class action. Such treatment will permit a large number of similarly-situated persons to prosecute their common claims in a single forum simultaneously, efficiently, and without the duplication of effort and expense that numerous individual actions would engender. Class treatment also will permit the adjudication of relatively small claims by many Class and/or Subclass members who could not otherwise afford to individually litigate an unfair business practice claim against this large corporate defendant. There are no difficulties likely to be encountered in the management of this class action that would preclude its maintenance as a class action, and no superior alternative exists for the fair and efficient group-wide adjudication of this controversy. 52. Defendant has acted on grounds generally applicable to the entire Class and/or

Subclasses, thereby making final injunctive relief or corresponding declaratory relief appropriate with respect to the Class and/or Subclasses as a whole. VI. FACTUAL BACKGROUND Early History 53. Every computer contains a microprocessor, an integrated circuit capable of

executing a menu of instructions and performing requested mathematical computations at very high speed. Microprocessors are defined by their instruction set -- the repertoire of machine language instructions that a computer follows. So, too, are computer operating systems -- 16

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 17 of 126

software programs that perform the instructions in the set allowing the computer to perform meaningful tasks. The first generation of microprocessors, which were capable of simultaneously handling 4 and then later 8 bits of data, evolved to provide 16-bit capability (the original DOS processors), then sometime later a 32-bit capability (allowing the use of advanced graphical interfaces such as later versions of the Microsoft Windows operating system), and now 64-bit capability. 54. When IBM defined the original PC standards in the early 1980s, it had available Among those

to it a variety of microprocessors, each with its own instruction set.

microprocessors were those developed by Motorola, Zilog, National Semiconductor, Fairchild, Intel, and AMD. 55. IBM opted for the Intel architecture, which utilized what became known as the

x86 instruction set (after Intel's naming convention for its processors, i.e., 80086, 80186, 80286, 80386), and a compatible operating system offered by Microsoft, known as DOS. 56. Unwilling to be consigned to a single source of supply, however, IBM demanded

that Intel contract with another integrated circuit company and license it to manufacture x86 chips as a second source. AMD, which had worked with Intel before in supplying microprocessors, agreed to abandon its own, competing architecture, and undertook to manufacture x86 chips as a second source of supply for IBM. Assured that it would not be dependent upon a monopoly supplier of x86 chips, IBM introduced the PC in August 1981 -- and its sales of those computers exploded. 57. Although an arbitrator later found that "AMD's sponsorship helped propel Intel

from the chorus line of semiconductor companies into instant stardom," Intel soon set out to

- 17

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 18 of 126

torpedo the 1982 AMD-Intel Technology Exchange Agreement (the "Agreement") by which each would serve as a second source for products developed by the other. 58. For example, pursuant to the Agreement, Intel was required to send AMD timely

updates of its second generation 80286 chip. Instead, in a "deliberate[]" effort "to shackle AMD progress," Intel sent AMD information "deliberately incomplete, deliberately indecipherable and deliberately unusable by AMD engineers," according to the arbitrator. The conduct was, in the arbitrator's words, "inexcusable and unworthy." Moreover, this conduct was not isolated. Intel elsewhere tried to "sabotage" AMD products, engaged in "corporate extortion" and demonstrated a near-malevolent determination "to use all of its economic force and power on a smaller competitor to have its way." 59. In 1984, in another effort to stifle AMD's business, Intel decided that

notwithstanding the Agreement, Intel would become the sole source for the promising 80386 chip. To fully realize its objective, Intel engaged in a scheme to mislead AMD and the public into erroneously believing that AMD would be a second source for this chip product, thereby keeping AMD in the Intel "competitive camp" for years. 60. This strategy served a broader purpose than simply preventing AMD from

competing with Intel. Customers' perception that AMD would continue to serve as Intel's authorized second source was essential to Intel's aim of entrenching the x86 family of microprocessors as the industry standard -- just as it had been essential to IBM's original introduction of the PC. 61. Intel was well aware that if computer manufacturers knew Intel intended to sole

source its 32-bit product, they would be motivated to select alternative products produced by companies offering second sources. Intel could not preserve the appearance that AMD would

- 18

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 19 of 126

second source the 386 if it terminated the contract or otherwise disclosed its actual intent. Thus, Intel stalled negotiations over product exchanges, while at the same time allowing AMD to believe that it could ultimately obtain the 386. This injured competition by deterring and impeding serious competitive challenges to Intel and directly injured AMD by depriving it of the revenues and profits it would have earned from such a challenge. 62. Intel implemented this secret plan for the purpose of acquiring and maintaining an

illegal monopoly in the x86 line of microprocessors, which it did by at least 1987. As was its plan, Intel's conduct drained AMD's resources, delayed AMD's ability to reverse-engineer or otherwise develop and manufacture competitive products, and deterred AMD from pursuing relationships with other firms. In so doing, Intel wrongfully secured the benefit of AMD's marketing skills and talent in support of the x86 line of microprocessors and related peripherals and secured the benefit of substantial competitively sensitive AMD information regarding its product development plans. 63. When AMD petitioned to compel arbitration in 1987 for Intel's breach and bad

faith, the arbitrator took notice of Intel's anticompetitive design: "In fact, it is no fantasy that Intel wanted to blunt AMD's effectiveness in the microprocessor marketplace, to effectively remove AMD as a competitor." 64. In 1992, after five years of litigation, the arbitrator awarded AMD more than $10

million in damages, prejudgment interest, and a permanent, nonexclusive and royalty-free license to any Intel intellectual property embodied in AMD's own 386 microprocessor, including the x86 instruction set. Confirmation of the award was upheld by the California Supreme Court two years later. In bringing the litigation to a close, the arbitrator hoped that by his decision, "the

- 19

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 20 of 126

competition sure to follow will be beneficial to the parties through an expanded market with appropriate profit margins and to the consumer worldwide through lower prices." 65. Shortly after confirmation of the award, AMD settled its outstanding disputes

with Intel in a 1995 agreement which gave AMD a shared interest in the x86 instruction set, but required AMD to develop its own architecture to implement those instructions. 66. The settlement also had the unintended benefit of forcing AMD to reinvent itself.

Beginning in the late 1990s, AMD committed its resources to innovating not just to be different, but to deliver solutions of greatest benefit to its customers. Going its own way proved beneficial: AMD's first x86 chip without Intel pin-compatibility, the Athlon microprocessor, delivered in 1999, marked the first (but not last) time AMD was to leapfrog Intel technologically and beat it to market with a new generation Windows microprocessor (and to break the 1GHz speed barrier in the process). 67. AMD's biggest breakthrough, however, came four years later -- in 2003. At that

time, AMD introduced an extension of x86 architecture that took Windows processors into the realm of 64-bit computing. Unlike Intel, which invested billions in its Itanium microprocessor and a new, uniquely 64-bit proprietary instruction set (which, because it was proprietary, would have been a game-ending development for AMD had it become the industry standard), AMD undertook to supplement the x86 instructions to accommodate 64-bit processing while allowing 32-bit software to be run as well. AMD's efforts culminated in April 2003 when it brought to market its Opteron microprocessor for servers (the workhorse computers used by businesses to run corporate networks, e-commerce websites, and other high-end, computationally-intense applications). Opteron was the industry's first x86 backward compatible 64-bit chip. Six months

- 20

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 21 of 126

later, AMD launched the Athlon64, a backward compatible 64-bit microprocessor for desktops and mobile computers. 68. The computing industry hailed AMD's introduction of 64-bit computing as an

engineering triumph. Said Infoworld in its August 27, 2004 issue, You just gotta love a Cinderella story. . . . AMD's rapid rise from startup to $5 billion semiconductor powerhouse is, as Humphrey Bogart's English teacher once said, the stuff of which dreams are made. . . . In the process, AMD has become known as the company that kept Intel honest, the Linux of the semiconductor world. . . . After decades of aping Intel architectures, the AMD64 architecture, rooted in Opteron and Athlon 64 processors, has actually been imitated by Intel in the form of Nocona, Intel's 64-bit version of Xeon. In a stunning reversal of fortune, Intel was forced to build that chip because Opteron was invading a server market that the Intel Itanium was supposed to dominate. 69. In what represented a paradigm shift in the microprocessor world, Microsoft

endorsed AMD's 64-bit instruction set and announced that Windows would support it. As noted by Infoworld, Intel then copied AMD's technology for its own 64-bit offerings ­ an event that confirmed AMD's technological emergence. Intel still has yet to catch up. 70. AMD has since extended its AMD64 technology to the balance of AMD's

microprocessor line-up (which now includes AMD Athlon 64, AMD Athlon 64 FX, Mobile AMD Athlon 64, AMD Sempron, and AMD Turion64 products). Owing also to AMD's pioneering developments in dual-core processors and its introduction of an improved architecture that speeds up microprocessor communications with memory and input/output devices, AMD has seized technological leadership in the microprocessor industry. Its innovation has won for it over 70 technology leadership and industry awards and, in April 2005, the achievement of being named "Processor Company of 2005" at, to Intel's embarrassment, an Intel-sponsored industry awards show.

- 21

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 22 of 126

71.

Tellingly, however, AMD's market share has not kept pace with its technical

leadership. Intel's misconduct is the reason. Intel has unlawfully maintained the monopoly IBM bestowed on it and has systematically excluded AMD and other competitors from any meaningful opportunity to compete for market share by preventing the companies that buy chips and build computers from freely deploying processors sold by AMD and other competitors; by relegating AMD and other competitors to the low-end of the market; by preventing AMD and other competitors from achieving the minimum scale necessary to become a full-fledged, competitive alternative to Intel; and by erecting impediments to competitors' ability to increase productive capacity for the next generation of microprocessors. Intel's exclusionary acts are the subject of the balance of this Complaint. VII. THE x86 PROCESSOR INDUSTRY Competitive Landscape 72. The x86 versions of Windows and Linux, the two operating systems that

dominate the business and consumer computer worlds, have spawned a huge installed base of Windows- and Linux-compatible application programs that can only run the x86 instruction set. This has given Intel effective ownership of personal computing. Although other microprocessors are offered for sale, the non-x86 microprocessors are not reasonably interchangeable with x86 microprocessors because none can run the x86 Windows or Linux operating systems or the application software written for them. 73. The relevant product market is x86 Microprocessor Chips, because a putative

monopolist in this market would be able to raise the prices of x86 Microprocessor Chips above a competitive level without losing so many customers to other microprocessors as to make this increase unprofitable.

- 22

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 23 of 126

74.

While existing end-users can theoretically shift to other operating-system

platforms, high switching costs associated with replacing existing hardware and software make this impractical. Further, the number of new, first-time users who could choose a different operating-system platform is too small to prevent an x86 Microprocessor Chip monopolist from imposing a meaningful price increase for a non-transitory period of time. Computer manufacturers would also encounter high switching costs in moving from x86 Microprocessor Chips to other architectures, and no major computer maker has ever done it. In short, demand is not cross-elastic between x86 Microprocessor Chips and other microprocessors at the competitive level. 75. The relevant geographic market for x86 microprocessors is worldwide. Intel and

its competitors compete globally; PC platform architecture is the same from country to country; microprocessors can be, and frequently are, easily and inexpensively shipped around the world; and the potential for arbitrage prevents chipmakers from pricing processors differently in one country than another. 76. Intel dominates the worldwide x86 Microprocessor Market. According to

published reports, over the past several years, Intel has consistently achieved more than a 90% market share as measured by revenue, while AMD's revenue share has remained at approximately 9%, with all other microprocessor manufacturers relegated to less than 1%. Intel has captured at least 80% of x86 Microprocessor Chips sales in seven of the last eight years. Since 1999, AMD's worldwide volume share has hovered at 15%, only once penetrating barely the 20% level. The following chart is illustrative: x86 Worldwide CPU Unit Market Share 1997 Intel 1998 1999 2000 2001 2002 2003 2004

85.0% 80.3% 82.2% 82.2% 78.7% 83.6% 82.8% 82.5% - 23

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 24 of 126

AMD 7.3% 11.9% 13.6% 16.7% 20.2% 14.9% 15.5% 15.8% Others 7.5% 7.9% 77. 4.2% 1.1% 1.1% 1.4% 1.7% 1.7%

Intel's x86 family of microprocessors no longer faces any meaningful competition

other than from AMD. National Semiconductor acquired Cyrix in 1997 but shuttered it less than two years later. At the beginning of this year only two other x86 chip makers remained, Via Technologies, Inc. and Transmeta Corporation -- which together account for less than 2% of the market. Transmeta has since announced its intention to cease selling x86 microprocessors, and Via faces dim prospects of growing its market share to a sustainable level. 78. Intel is shielded from new competition by huge barriers to entry. A chip

fabrication plant ("fab") capable of efficiently mass-producing x86 microprocessors carries a price tag of at least $2.5 to $3.0 billion. In addition, any new market entrant would need the financial wherewithal to underwrite the billions more in research and development costs to design a competing x86 microprocessor and to overcome almost insurmountable IP and knowledge barriers. Customers for x86 Microprocessors 79. Annual worldwide consumption of x86 Microprocessor Chips currently stands at

just over 200 million units per year and is expected to grow by 50% over the remainder of the decade. Relatively few microprocessors are sold for server and workstation applications (8.75 million in 2004), but these command the highest prices. Most x86 Microprocessor Chips are used in desktop PCs and mobile PCs, with desktops currently outnumbering mobiles by a margin of three to one. Of the total worldwide production of computers powered by x86 Microprocessor Chips, 32% are sold to U.S. consumers; U.S. sales of AMD-powered computers account for 29% of AMD's production.

- 24

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 25 of 126

80.

The majority of x86 Microprocessor Chips are sold to a handful of large OEMs

(original equipment manufacturers), highly visible companies recognized throughout the world as the leading computer makers. Regarded by the industry as "Tier One" OEMs over most product categories are: Hewlett-Packard ("HP"), which now also owns Compaq Computer; Dell, Inc.; IBM, which as of May 1, 2005, sold its PC (but not server) business to Lenovo; Gateway/eMachines; and Fujitsu/Fujitsu Siemens, the latter a Europe-based joint venture. Toshiba, Acer, NEC and Sony are also commonly viewed as Tier One OEMs in the notebook segment of the PC market. HP and Dell are the dominant players, collectively accounting for over 30% of worldwide desktop and mobile sales, and almost 60% of worldwide server sales. Both are U.S.-based companies, as are IBM and Gateway/eMachines; and all but Gateway have U.S. manufacturing operations (as does Sony, which operates a North American production facility in San Diego). 81. Worldwide, the Tier One OEMs collectively account for almost 80% of servers

and workstations (specialty high-powered desktops), more than 40% of worldwide desktop PCs, and over 80% of worldwide mobile PCs. According to industry publications, unit market share in 2004 among the Tier One OEMs were as follows: OEM Market Shares -- 2004 Company Hewlett-Packard Dell IBM/Lenovo Fujitsu/Siemens Acer Toshiba NEC Server/WS 29.86% 28.34% 14.46% 3.70% 0.81% 0.31% 2.06% - 25 Desktop 13.69% 16.18% 3.69% 2.83% 1.85% 0.05% 2.02% Mobile 16.23% 17.27% 9.20% 6.88% 8.53% 12.73% 4.50%

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 26 of 126

Sony Gateway/eMachines Total 82.

-0.16% 79.70%

0.76% 2.48% 43.55%

4.23% 1.45% 81.02%

The balance of x86 production is sold to smaller system builders and to

independent distributors. The latter, in turn, sell to smaller OEMs, regional computer assemblers, value-added resellers, and other, smaller distributors. 83. OEMs have adopted a variety of business models, including direct sales to

customers through web-based e-commerce, sales through company-employed sales staffs (who target IT professionals and Fortune 1000 companies) and sales through a network of independent distributors (who focus on smaller business customers). With the exception of Dell, which markets to consumers only directly (mostly over the Internet), most OEMs also sell their products through retail chains. Intel and its competitors compete not only to have OEMs incorporate their microprocessors into their retail platforms but also to convince retailers to allocate shelf-space so that the platforms containing their respective microprocessors can be purchased in the retailers' stores. 84. Through its economic muscle and relentless marketing -- principally its "Intel

Inside" and "Centrino" programs, which financially reward OEMs for branding their PCs as Intel machines -- Intel has transformed the OEM world. While once innovative companies themselves, the OEMs have largely become undifferentiated distributors of the Intel platform, offering "Intel Inside" and "Centrino" computers largely indistinguishable from those of their rivals. As their products have become commoditized, the Tier One OEMs operate on small or negative margins and the overwhelming portion of PC profit flows to Intel.

- 26

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 27 of 126

85.

This profit drain has left OEMs and others in the distribution chain in a

quarter-to-quarter struggle to earn even a modest return on their assets, thereby making them continually susceptible to Intel's economic coercion, which is described below. VIII. INTEL'S UNLAWFUL PRACTICES 86. Intel has maintained its x86 microprocessor monopoly by deploying a host of

financial and other exclusionary business strategies that in effect limit its customers' ability or incentive to deal with Intel's competitors. Although differing from customer to customer and segment to segment, the Intel arsenal includes direct payments in return for exclusivity and nearexclusivity; discriminatory rebates, discounts and subsidies conditioned on customer "loyalty" that have the practical and intended effect of creating exclusive or near-exclusive dealing arrangements; threats of economic retaliation against those who give, or even contemplate giving, too much of their business to Intel's competitors; and misuse of industry standardssetting processes so as to disadvantage competitors' products in the marketplace, thus increasing costs to consumers of x86 Microprocessor Chips and products containing such chips ­ including Plaintiffs and the other members of the Class and/or Subclasses. 87. Intel's misconduct is global. It has targeted both U.S. and offshore customers at

all levels to prevent competitors from building market share anywhere, with the goal of stifling competitors and keeping Intel's customers dependent on Intel for very substantial amounts of product. In this way, OEMs remain vulnerable to continual threats of Intel retaliation, competitors remain capacity-constrained, the OEMs remain Intel-dependent, and Intel thereby perpetuates its economic hold over them, allowing it to continue to demand that customers curtail their dealings with competitors. The cycle repeats itself: by unlawfully exploiting its existing market share, Intel impedes the growth of competitors, thereby laying a foundation for

- 27

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 28 of 126

the next round of foreclosing actions with the effect that competitors' ability to benefit from their current technological advances is curtailed to the harm of consumers -- including Plaintiffs and the other members of the Class and/or Subclasses. 88. According to AMD, Intel's biggest competitor, the following are examples of the

types of improper exclusionary practices that Intel has employed. 1. Practices Directed At OEMs a. 89. Exclusive and Near-Exclusive Deals

Dell. In its history, Dell has not purchased a single AMD x86 Microprocessor

Chip despite acknowledging Intel's shortcomings and customers' requests for AMD solutions, principally in the server sector. As Dell's President and CEO, Kevin Rollins, publicly stated last February: Whenever one of our partners slips on either the economics or technology, that causes us great concern. . . . For a while, Intel admittedly slipped technologically and AMD had made a step forward. We were seeing that in customer response and requests. 90. Nonetheless, during the relevant time period, Dell has been and remains Intel-

exclusive. According to industry reports, Intel has secured Dell's exclusivity with outright payments and favorable discriminatory pricing and service. In discussions about buying from AMD, Dell executives have conceded that they must financially account for Intel retribution in negotiating pricing from AMD. 91. Sony. With the introduction of its Athlon microprocessor in 1999, AMD began to

make notable inroads into Intel's sales to major Japanese OEMs, which export PCs internationally including into the U.S. By the end of 2002, AMD had achieved an overall Japanese unit market share of approximately 22%. To reverse the erosion of its business, in 2003 Intel paid Sony multimillion dollar sums, disguised as discounts and promotional support, in

- 28

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 29 of 126

exchange for absolute microprocessor exclusivity. Sony abruptly cancelled an AMD Mobile Athlon notebook model. Soon thereafter, it cancelled plans to release AMD Athlon desktop and notebook computers. As a result, AMD's share of Sony's business dropped from 23% in 2002 to 8% in 2003, and then to 0%, where it remains today. In proceedings brought by the JFTC, Intel has failed to contest the JFTC charges of misconduct with respect to Sony. 92. Toshiba. Like Sony, Toshiba was once a significant AMD customer, but also like

Sony, Toshiba received a very substantial payment from Intel in 2001 not to use AMD processors. Toshiba thereupon dropped AMD. Its executives agreed that Intel's financial inducements amounted to "cocaine," but said they were hooked, because reengaging with AMD would jeopardize Intel market development funds estimated to be worth $25-30 million per quarter to Toshiba. Toshiba made clear to AMD that the tens of millions of dollars of additional marketing support was provided on the explicit condition that Toshiba could not use AMD microprocessors. In proceedings brought by the JFTC, Intel has accepted the JFTC charges of misconduct with respect to Toshiba. 93. NEC. AMD also enjoyed early success with NEC, capturing nearly 40% of its

microprocessor purchases for notebooks and desktops in the first quarter of 2002. In May 2002, however, Intel agreed to pay NEC more than three billion yen per quarter in exchange for caps on NEC's purchases from AMD. The caps assured Intel at least 90% of NEC's business in Japan, and they established an overall worldwide quota on NEC's AMD dealings. The impact was immediate. While AMD had maintained an 84% share of NEC's Japanese consumer desktop business in the third quarter of 2002, after the payments, AMD's share quickly plummeted to virtually zero in the first quarter of 2003. NEC has made clear to AMD that its Japanese share must stay in the single digits pursuant to NEC's agreement with Intel. Worldwide, AMD's share

- 29

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 30 of 126

dipped from nearly 40% to around 15%, where it stands today. In proceedings brought by the JFTC, Intel has accepted the JFTC charges of misconduct with respect to NEC. 94. Fujitsu. In the summer of 2002, Fujitsu informed AMD that Intel had pressured

Fujitsu to remove Fujitsu's AMD-powered desktop models from Fujitsu's website. Fujitsu complied by making any potential AMD-buyer click past Intel products to get to the AMD offerings. Then, in early 2003, Intel moved to lock up an even greater share of Fujitsu's business. Intel offered an undisclosed package of financial incentives to Fujitsu in return for Fujitsu's agreement to restrict its dealings with AMD. Fujitsu's catalog currently limits AMD to a single notebook product. In proceedings brought by the JFTC, Intel has accepted the JFTC charges of misconduct with respect to Fujitsu. 95. Hitachi. According to the JFTC, Intel has also purchased an exclusive-dealing

arrangement with Hitachi, which had been a substantial AMD customer. The agreement caused AMD's Hitachi business to fall precipitously. For example, during the first part of 2002, AMD was shipping 50,000 Athlon microprocessors to Hitachi per quarter. But by the middle of the year, AMD sold no microprocessors to Hitachi at all. In proceedings brought by the JFTC, Intel has accepted the JFTC charges of misconduct with respect to Hitachi. 96. Gateway/eMachines. From 2001 to 2004, Gateway was exclusively Intel --

which was not the case prior to that time. In 2001 former Gateway CEO, Ted Waitt, explained to an AMD executive that Intel offered him large monetary inducements not to deal with AMD -which he could not refuse: "I have to find a way back to profitability. If by dropping you, I become profitable, that is what I will do." Shortly thereafter, Gateway stopped purchasing from AMD and issued a press release announcing its Intel exclusivity. The announcement came within weeks of similar public announcements of Intel exclusivity by both IBM and Micron.

- 30

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 31 of 126

97.

Supermicro. Intel's exclusive dealing also extends to small, specialty OEMs, of

which Supermicro is a good example. Supermicro, the preeminent system assembler for servers and other high-end computers, historically has followed the Dell strategy of never buying from AMD. This arrangement foreclosed AMD from a large part of the approximately one fifth of the server sector not controlled by the Tier One OEMs. Following two years of negotiation, Supermicro, in 2004, finally agreed to begin developing an Opteron-powered server; however, Supermicro so feared retaliation by Intel relating thereto that it secretly moved the AMD development to quarters behind Supermicro's main manufacturing facility. Further, Supermicro forbade AMD from publicizing the product or beginning any marketing prior to its actual release. When, in April 2005, Supermicro finally broke away from years of Intel exclusivity, it restricted distribution of its newly-released Opteron-powered product to only sixty of its customers and promoted them with a glossy, upscale brochure devoid of its name and labeled "secret and confidential." b. 98. Product-Line, Channel, or Geographic Restrictions

Intel has also bought more limited exclusivity from OEMs in order to exclude

AMD from the most profitable lines or from channels of distribution best tailored to take advantage of AMD's price/performance advantage over Intel. 99. In exchange for discriminatory discounts, subsidies or payments, for example,

Intel has largely foreclosed AMD from the lucrative commercial desktop sector. Intel has focused on the major OEMs because, when IT executives from Fortune 1000 companies purchase desktop computers, they look for a strong brand on the box --Dell, IBM or HP. Knowing this, Intel has relentlessly fought to block the introduction of an AMD-powered

- 31

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 32 of 126

commercial desktop by the major OEMs who have not ceded total exclusivity to Intel. What follows, again, are only representative examples of Intel misconduct. 100. HP. In 2002, when AMD set out to earn a place in HP's commercial desktop

product roadmap, HP demanded a $25 million quarterly fund to compensate it for Intel's expected retaliation. Eager to break into the commercial market, and to earn a place in HP's successful "Evo" product line, AMD agreed instead to provide HP with the first million microprocessors for free in an effort to overcome Intel's financial hold over HP. On the eve of the launch, HP disclosed its plan to Intel, which told HP it considered AMD's entry into HP's commercial line a "Richter 10" event. It immediately pressured HP into: (a) withdrawing the AMD offering from its premier "Evo" brand; and (b) withholding the AMD-powered computer from HP's network of independent value-added resellers, HP's principal point of access to small business users for whom the computer was designed in the first place. Intel went so far as to pressure HP's senior management to consider firing the HP executive who spearheaded the AMD commercial desktop proposal. As a result of Intel's coercion, the HP-AMD desktop offering was dead on arrival. HP ended up taking only 160,000 of the million microprocessors AMD offered for free. As of today, HP's AMD-equipped commercial desktops remain channelrestricted, and AMD's share of this business remains insignificant. 101. Intel also purchased HP's exclusivity for its most popular notebook line. HP

captured 15% of the U.S. retail market last Christmas with an Intel-powered 14.1" display notebook (the "DV 1000") with a popular power saving feature called Quick Play. When AMD sought to convince HP to carry a similar AMD-powered notebook, HP declined. It explained that Intel had paid between $3 and $4 million to lock up this product line for at least one year.

- 32

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 33 of 126

102.

Gateway. After Gateway's 2004 merger with eMachines, AMD attempted to

revive the relationship it had enjoyed with Gateway until 2001, but experienced extremely limited success. While Gateway built one AMD-powered desktop model at the request of Circuit City, AMD remains locked out entirely of Gateway's direct internet sales, its commercial offerings and its server line. According to Gateway executives, their Company has paid a high price for even its limited AMD dealings. They claim that Intel has beaten them into "guacamole" in retaliation for those limited dealings. 103. IBM. AMD and IBM began negotiations in August 2000 over a proposed

commercial PC business partnership. After seven months and with a deal nearing completion, Intel approached IBM with an incentive-based program under which Intel would become IBM's "preferred supplier" for processors in commercial products. "Preferred" meant exclusive. IBM accepted Intel's proposal and terminated discussions with AMD. In return for that exclusivity, according to IBM executive Ed Thum, Intel paid IBM "millions of dollars in market development funds." 104. Intel also acted to thwart AMD efforts to partner with IBM on servers. Although

IBM joined AMD as a launch partner when it introduced its Opteron 64-bit server chip in April 2003 -- signaling to the industry and IT professionals its confidence in the product -- Intel soon dissuaded IBM from aggressively marketing Opteron servers. After investing heavily in its design, IBM consigned its one Opteron computer model to a single target market segment (High Performance and Technical Computing). This was done, according to an industry report (confirmed by an IBM executive), because Intel paid IBM to shelve any further Opteron development. IBM also took Intel money in 2004 to scrap plans for a multiple-microprocessor Opteron server it had already designed and previewed with customers.

- 33

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 34 of 126

105.

Intel has also purchased IBM exclusivity in its "ThinkCentre" line of commercial

desktops. When AMD pressed IBM to add an Athlon 64 model to its "ThinkCentre" roadmap, IBM executives explained that the move would cost them important Intel subsidies, and they thus declined to do so. 106. Fujitsu. In 2002, Fujitsu and AMD formed an alliance to develop a low-power

commercial notebook (FMV Lifebook MG Series) scheduled to go to market in the first quarter of 2003, which AMD spent over 20 million yen designing. Shortly before the launch, Fujitsu told AMD that Intel would not allow it to launch an AMD-powered commercial notebook, and the project died. To this day, AMD remains locked out of Fujitsu's commercial notebook lines. Intel's exclusionary conduct with Fujitsu extends beyond commercial notebooks. In the consumer space, for example, Intel purchased total exclusivity for Fujitsu's FM-Biblo NB consumer notebook line. When AMD tried to break Intel's lock on Fujitsu notebooks by offering to match any Intel discount, Fujitsu made clear that there was no price AMD could pay because Intel simply would not allow it. To this day, AMD remains locked out of Fujitsu's Biblo line as well. 107. Fujitsu-Siemens. Fujitsu-Siemens, a European joint-venture, was once a

mainstay for AMD's desktop business, with AMD chips powering over 30% of Fujitsu-Siemens' offerings in the consumer sector. In early 2003, Intel offered Fujitsu-Siemens a "special discount" on Celeron processors which Fujitsu-Siemens accepted in exchange for hiding its AMD computers on its website and removing all references to commercial AMD-powered products in the company's retail catalog. 108. Intel has also succeeded in convincing Fujitsu-Siemens to impose market

restrictions on its AMD-powered PCs. Its parent, Fujitsu, currently sells an AMD-equipped

- 34

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 35 of 126

Lifebook S2010, a commercial notebook, but only in the U.S. and Japan. Fujitsu-Siemens has declined AMD's plea to offer the machine in the European market as well. Similarly, FujitsuSiemens designed for the European market the FMC Lifebook MG Series notebook. FujitsuSiemens, however, refused to offer that computer in Asia or North America. Finally, although Fujitsu-Siemens produces an AMD commercial desktop -- the Scenico -- it refuses to advertise it on its website, offering it instead only as a build-to-order product. Having invested significantly to bring these computers to market, Fujitsu-Siemens has been able to offer no explanation for its refusal to exploit them worldwide. AMD's unit share of Fujitsu-Siemens' business recently fell below 30% for the first time in four years. 109. NEC. Intel was forced to relax its hold on NEC's business when long-time NEC

customer, Honda Motor Company, demanded that NEC supply it with servers powered by AMD's Opteron microprocessors. After underwriting the considerable expense of designing and manufacturing an Opteron server for Honda, NEC then inexplicably refused to market the product to any of its other customers. 110. There is no reason, other than Intel's chokehold on the OEMs, for AMD's

inability to exploit its products in important sectors, particularly commercial desktops. These computers, which large corporate customers buy in the tens of thousands at a time, represent a lucrative opportunity for the supplier. Yet, the microprocessors that power them are identical to microprocessors in consumer computers, a sector in which AMD has won both praise and market share. The only material difference between the consumer and commercial segments is that many more system builders supply desktops to consumers, making it more difficult for Intel to control their microprocessor choice.

- 35

Case 1:05-md-01717-JJF

Document 63-4

Filed 05/02/2006

Page 36 of 126

c. 111.

Exclusionary Rebates

Intel has also imposed on OEMs a system of "first-dollar" rebates that have the

practical and intended effect of creating exclusive or near-exclusive dealing arrangements and artificially foreclosing AMD from competing for a meaningful share of the market. 112. In general, the rebate schemes operate as follows: quarterly, Intel unilaterally

establishes for each of its customers a target level of purchases of Intel microprocessors. If the customer achieves the target, it is entitled to a rebate on all of the quarter's purchases of all microprocessors -- back to the very first one -- generally in the neighborhood of 8-10% of the price paid. Intel provides the rebate in cash at the quarter's close. OEMs operate on razor-thin margins, so qualifying for an Intel rebate frequently means the difference between reporting a profit or a loss in the coming ­ and closely watched ­ quarterly earnings. 113. In contrast to "volume discounts" that sellers offer on a graduated and

non-discriminatory basis to reflect cost efficiencies that accrue when dealing in larger quantities, Intel's is a system of "penetration" or "loyalty" rebates designed to exclude AMD from a substantial portion of the market. Intel intentionally sets a rebate trigger at a level of purchases it knows to constitute a dominant percentage of a customer's needs. Intel is a