FTC sues Intel over antitrust violations

AMD and Intel may have settled their dispute over alleged antitrust and licensing violations last month, but the snowball AMD set in motion years ago is still rolling. Earlier this morning, the Federal Trade Commission filed a formal suit against Intel, accusing the chipmaker of waging a "systematic campaign" to shut rivals out of the marketplace, thereby restricting consumer choice and stifling innovation over the past decade.

According to the FTC, Intel used "threats and rewards" to coerce major computer vendors like Dell, HP, and IBM not to buy competing microprocessors—pretty much the same allegation the European Commission used to justify fining the chipmaker for $1.44 billion in May. The FTC's accusations go further, though.

In its announcement, the FTC expresses a belief that Intel "secretly redesigned key software, known as a compiler, in a way that deliberately stunted the performance of competitors' CPU chips." The agency goes on to point out that Intel is falling behind the competition in the market for graphics processors, which "have lessened the need for CPUs, and therefore pose a threat to Intel's monopoly power." In response, the chipmaker has purportedly "misled and deceived potential competitors in order to protect its monopoly."

Unlike its European counterpart, the FTC doesn't talk about exacting any fines; it claims to be after only court orders to change Intel's business practices:

To remedy the anticompetitive damage alleged in the complaint, the FTC is seeking an order which includes provisions that would prevent Intel from using threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its CPU or GPU chips. The FTC also may seek an order prohibiting Intel from unreasonably excluding or inhibiting the sale of competitive CPUs or GPUs, and prohibiting Intel from making or distributing products that impair the performance–or apparent performance–of non-Intel CPUs or GPUs.

Don't expect Intel to be slapped with a court order anytime soon, however. An administrative law judge has been "tentatively scheduled" to hear FTC's case at 10 AM... on September 15, 2010.

Meanwhile, Intel hasn't taken long to issue a statement labeling the FTC's case misguided and, paradoxically, harmful to consumers:

Intel has competed fairly and lawfully. Its actions have benefitted consumers. The highly competitive microprocessor industry, of which Intel is a key part, has kept innovation robust and prices declining at a faster rate than any other industry. The FTC's case is misguided. It is based largely on claims that the FTC added at the last minute and has not investigated. In addition, it is explicitly not based on existing law but is instead intended to make new rules for regulating business conduct. These new rules would harm consumers by reducing innovation and raising prices.
Intel also sent us a comment from Senior VP and General Counsel Doug Melamed, who notes that Intel attempted to settle the case with the FTC. The agency purportedly made that impossible, however: "Settlement talks had progressed very far but stalled when the FTC insisted on unprecedented remedies – including the restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint -- that would make it impossible for Intel to conduct business."
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