Intel sued by the US Federal Trade Commission

 

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Posted on 16 Dec 2009 at 17:10

In response to this, the FTC says that Intel has responded to this competitive challenge "by embarking on a similar anticompetitive strategy". This strategy "aims to preserve its CPU monopoly by smothering potential competition from GPU chips such as those made by Nvidia". The Commission's complaint accuses Intel of misleading and deceiving potential competitors in order to protect its monopoly, which in turn could increase the probability of Intel extending its monopoly into the graphics chip market.

The FTC's filing comes a month after AMD and Intel announced that they had reached a landmark out-of-court settlement to the case which AMD filed in 2005, where Intel agreed to pay AMD $1.25bn (approx. £750m) in exchange for AMD agreeing to withdraw all regulatory complaints across the world. It also covered all other outstanding legal disputes between the two chipmakers and established an important set of Business Practice Provisions, which Intel agreed to adhere to. These prohibit Intel from offering inducements to customers in exchange for their agreement to buy all CPUs from Intel, limit or delay their purchase of CPUs from AMD as well as no longer enticing customers to limit their engagement or participation in AMD's activities.

What makes the story all the more interesting is the way in which Intel responded to the filing. In a statement, the chip giant said that it has competed "fairly and lawfully," despite signing an agreement with AMD to never try to control the market using underhand tactics. "[Intel's] actions have benefitted consumers," it continued. "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," claims Intel. "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."

Doug Melamed, Intel's general counsel, added, "This case could have, and should have, been settled. 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.

"The FTC's rush to file this case will cost taxpayers tens of millions of dollars to litigate issues that the FTC has not fully investigated," continued Melamed. "It is the normal practice of antitrust enforcement agencies to investigate the facts before filing suit. The Commission did not do that in this case."

Author: Tim Smalley