June 21, 2004 10:39 AM PDT

Intel dealt blow by high court in EU probe

The U.S. Supreme Court on Monday ruled 7-1 that confidential Intel documents can be turned over for use in a European antitrust investigation of the chipmaker's business practices.

The case arose out of an antitrust complaint that Advanced Micro Devices, Intel's archrival, filed with the European Union's Directorate-General for Competition. Filed in the early part of the decade, AMD alleged that Intel unfairly used marketing funds to prevent competitors from landing deals with PC makers. AMD recommended that the EU seek documents that Intel had filed in an unrelated private antitrust case in an Alabama federal court.

Monday's ruling by the high court, which gives a California court wide discretion in permitting or refusing AMD's request, could lend more ammunition to the European Commission's ongoing scrutiny of Intel. The investigation was opened in 2001 and had been quiet until this month, when the commission opened a new round of inquiries.

Intel had told the U.S. Supreme Court that AMD had only limited rights to seek disclosure of documents, but the court disagreed. Justice Ruth Bader Ginsburg wrote in the majority opinion that federal law "authorizes, but does not require, discovery assistance," and that the lower courts could "determine what, if any, assistance is appropriate" during further proceedings in the case.

Current federal law says that judges may require a person or a corporation to "produce a document or other thing for use in a proceeding in a foreign or international tribunal." The case turned on the meaning of foreign tribunal and whether the law required disclosure even when the European Commission itself had not requested the documents.

The documents in question were produced in a legal dispute between Intergraph and Intel. In a complaint filed with the European Commission's Directorate-General for Competition, AMD recommended that European officials seek access to the Intergraph and Intel documents, which arose out of a complex legal dispute that involved allegations of patent and antitrust violations.

After the European Commission chose not to follow its advice, AMD asked a federal district court in California to order Intel to divulge the documents. The court refused. But the 9th Circuit reversed, saying the aim of federal law was "providing efficient assistance to participants in international litigation and encouraging foreign countries by example to provide similar assistance to our courts."

The Bush administration had sided with AMD before the Supreme Court, saying in a brief that "the court of appeals was correct."

The U.S. Chamber of Commerce, on the other hand, disagreed. Its brief worried that AMD's position would let competitors undertake courtroom fishing expeditions: "Under the 9th Circuit's ruling, any company that operates abroad can obtain nearly unlimited access to the business documents and competitive plans of its business rivals by filing a complaint with the European Commission and then seeking discovery."

In a dissent on Monday, Justice Stephen Breyer said his colleagues interpreted federal law to "extend beyond what I believe Congress might reasonably have intended." Justice Sandra Day O'Connor did not participate in the decision.

Intel spokesman Chuck Mulloy said that the decision of the Supreme Court was a narrow one. The court essentially ruled that the California court could release the documents to the director general of the EU in its role as a quasi-judicial authority, but did not say it had to release the documents. Intel and AMD will now argue in the California court on whether discovery should in fact take place.

Mulloy further added that the European Commission has already indicated it doesn't want the document. It filed briefs in both the 9th Circuit and Supreme Court proceedings arguing against discovery.

Patrick Lynch, an attorney at O'Melveny & Myers that represented AMD in the case, said he is gratified with the results. He added that he doesn't expect the European Commission to oppose the company's efforts to obtain the documents. The documents sought relate to Intel's discount and rebate policies, among other matters.

Lynch further said that Intel's argument that allowing AMD or the European Commission to obtain the documents propounded under seal in the Alabama case will have a chilling effect on corporate discovery. Intel can seek a protective order.

CNET News.com's Michael Kanellos contributed to this report.

 

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