Intel sued by the US Federal Trade Commission

 

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Posted on 16 Dec 2009 at 17:10

The Federal Trade Commission has filed a lawsuit against Intel, charging the world's largest microprocessor manufacturer of illegally using its dominant market position for a decade "to stifle competition and strengthen its monopoly."

In the complaint, the FTC accuses Intel of waging "a systematic campaign to shut out rivals' competing microchips by cutting off their access to the marketplace." In the process, the FTC says, Intel has deprived customers of choice and innovation.

The FTC argues that Intel's anticompetitive tactics were designed to put the brakes on superior competitive products (such as the AMD Athlon 64) that threatened its monopoly in the CPU business. The FTC believes it has evidence to suggest that these tactics have succeeded over the last decade.

"Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," said Richard Feinstein, director of the FTC's Bureau of Competition, in a statement. "It's been running roughshod over the principles of fair play and the laws protecting competition on the merits. The Commission's action today seeks to remedy the damage that Intel has done to competition, innovation, and, ultimately, the American consumer."

Reading through the filing, the FTC's evidence matches up closely with that obtained by both the European Commission and New York State, which filed a separate case at the start of November. It claims that Intel coerced the world's largest computer manufacturers using "threats and rewards"; those manufacturers who are named include Dell, HP and IBM. The practice, the FTC says, is known as exclusive or restrictive dealing and is designed to prevent PC manufacturers from promoting computers that don't use Intel CPUs.

The FTC also alleges that Intel secretly redesigned software compilers - a small program that helps to improve a microprocessor's performance by optimising code so that it can be executed more efficiently - which "deliberately stunted the performance of competitors' CPUs". Intel apparently told its customers that software performed better on its CPUs, but deceived them by "failing to disclose that these differences were due largely or entirely to Intel's compiler design".

Futher, the FTC says that Intel "once again finds itself falling behind the competition". This time, it's in the market for graphics processing units or GPUs and "some other related markets." The FTC says that the GPU has "lessened the need for CPUs, and therefore poses a threat to Intel's monopoly ideas."