Intel’s antitrust legal battles escalated sharply yesterday when New York’s attorney-general accused the company of using “illegal threats and collusion” to dominate the market for computer microprocessors.

In an 87-page complaint, Andrew Cuomo said that Intel had engaged in a “systematic worldwide campaign of illegal, exclusionary conduct to maintain its monopoly power” in the market for computer chips that began in 2001.

It follows similar claims made in an action by the European Commission that resulted in a record $1.45 billion (£873 million) fine for Intel earlier this year. Mr Cuomo’s move is the first time that such allegations have led to formal regulatory action in America.

The complaint accuses Intel, the world’s biggest computer chip maker, of trying to prevent the sale of competitors’ products by paying billions of dollars in bribes, or “rebates”, to computer manufacturers. Mr Cuomo also said that Intel had retaliated against companies that did too much business with its rivals.

The suit, filed in a federal court, quoted e-mails allegedly showing how Hewlett-Packard, Dell and IBM executives feared that Intel would punish their companies if they used chips from a rival — Advanced Micro Devices (AMD).

“I understand the point about the accounts wanting a full AMD portfolio. The question is, can we afford to accept the wrath of Intel?”, an IBM executive wrote in January 2005, according to the suit.

Dell alone was paid almost $2 billion in rebates in 2006, the complaint alleged, in exchange for an agreement not to market products from AMD. The suit alleges: “Sometime, the payments from Intel exceeded a company’s reported quarterly net income.”

Mr Cuomo said that Intel also resorted to “bullying” customers that did not play along. Among other things, he said, Intel would threaten to end joint development ventures and instead direct funding to a manufacturer’s competitors.

Mr Cuomo said: “Rather than compete fairly, Intel used bribery and coercion to maintain a stranglehold on the market. Intel’s actions not only unfairly restricted potential competitors, but also hurt average consumers who were robbed of better products and lower prices.”

Intel has denied the charges against it. Chuck Mulloy, a spokesman, insisted that the company’s sales practices were legitimate. “We never threatened anyone,” he said. “We disagree with the New York attorney-general. Neither consumers, who have consistently benefited form lower prices and increased innovation, nor justice are being served by the decision to file a case now. Intel will defend itself.”

The company has filed an appeal against the European Commission’s ruling. The US Federal Trade Commission has been investigating Intel since 2008 over similar charges but has not begun formal proceedings against the company.

Intel, based in Santa Clara, California, controls nearly 80 per cent of the global microprocessor market. AMD, in nearby Sunnyvale, essentially has the rest. AMD launched a lawsuit against Intel four years ago. The case is set to go to trial in a few months.

• Microsoft said that it was cutting 800 more jobs, in addition to the 5,000 layoffs already announced.

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