It took a mediator—and a trip to Maui—to break the biggest logjam in landmark settlement talks between Intel and Advanced Micro Devices. Before arriving at the agreement that ended years of acrimony and legal wrangling between the world's largest makers of computer chips, representatives of each needed to answer one fundamental question: How much money would change hands?
The financial settlement was hammered out very late in more than a half-year of negotiations that culminated in a Nov. 12 announcement that Intel (INTC) would pay $1.25 billion to resolve long-standing antitrust allegations by AMD (AMD). Several people close to both sides gave BusinessWeek a play-by-play outline of the dramatic and sometimes tense talks dating to April 2009.
Money—and who would pay it—proved the thorniest point. People on both sides say AMD wanted payment in exchange for dropping antitrust allegations, while Intel said it should be compensated for giving an AMD subsidiary access to its patents. The resulting disagreement threatened to derail settlement talks. But parties hammered out an eleventh-hour compromise during a two-day marathon of meetings this fall with a mediator in Hawaii.
AMD had accused Intel of anti-competitive behavior in the market for computer chips. In court documents, AMD alleged that its larger rival used multibillion-dollar payments to coerce PC makers such as Dell (DELL) and Hewlett-Packard (HPQ) into using Intel products to the exclusion of AMD's chips. To drop pending lawsuits, AMD initially requested "multiple billions of dollars," according to one person involved in the process.
Intel insisted that instead, it should receive payment in relation to another issue under dispute: long-standing agreements that let the companies share certain patents on PC chips. For years, Intel and AMD agreed to share certain technology to ensure that computer manufacturers can expect a relatively consistent product from both. But discord arose earlier in the year when AMD, as part of a sweeping reorganization, moved to spin out its chip-manufacturing operations into a new company called GlobalFoundries. In March, Intel threatened to pull one of the pacts that dated to 2001, saying AMD "cannot unilaterally extend Intel's licensing rights to a third party." If GlobalFoundries couldn't use the patents, AMD's ability to produce valuable chips would be jeopardized, and Intel would have a leg up in ongoing battles.
With both sides at loggerheads over how to value the patents, Intel Chief Administrative Officer Andy Bryant persuaded negotiators to take the issue to a mediator.
They turned to Antonio Piazza, a partner at the San Francisco law firm Gregorio, Haldeman & Piazza, which specializes in mediation. Piazza had helped Intel and AMD resolve an earlier legal dispute in 1994. The attorney resides in San Francisco and Maui and prefers to meet with parties in one of those locations. Piazza is said to have a photographic memory and a knack for bringing parties together in deals where the situation seems intractable. "There was no fun on the beach," says one person who was there. The meetings, held in a hotel on Maui, lasted two days. Piazza's firm declined to comment for this article.
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