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FTC Files Suit Against Intel

December 16, 2009

The U.S. government filed suit against Intel Corp on Wednesday after accusing the world’s biggest computer chipmaker of illegally using its market dominance to stifle competition over the last ten years, Reuters reported.

The Federal Trade Commission (FTC) alleged that for a decade now Intel has waged a systematic campaign to shut out competing microchips produced by rivals by cutting off their access to the marketplace.

Richard Feinstein, director of the FTC’s Bureau of Competition, said Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly.

“It’s been running roughshod over the principles of fair play and the laws protecting competition on the merits,” Feinstein said.

He said the Commission’s action seeks to remedy the damage that Intel has done to competition, innovation and the American consumer. The case has been granted a tentative hearing on September 8, 2010.

The FTC is hoping to secure an order that would prevent Intel from “using threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate (chip) prices.”

The FTC alleges that Intel’s anticompetitive tactics were an attempt to slow superior competitive products that threatened its monopoly in the central processing unit (CPU) microchip market.

The FTC statement said: “Over the last decade, this strategy has succeeded in maintaining the Intel monopoly at the expense of consumers. Intel deprived consumers of choice and innovation.”

Intel has been accused of using “threats and rewards” with major computer manufacturers like Dell, Hewlett-Packard and IBM to coerce them not to buy chips produced by rival companies.

The FTC also alleged that Intel secretly redesigned key software, known as a compiler, in a way that deliberately stunted competitors’ CPU chips performance.

“Intel told its customers and the public that software performed better on Intel CPUs than on competitors’ CPUs, but the company deceived them by failing to disclose that these differences were due largely or entirely to Intel’s compiler design,” it said.

The company said Intel has found itself “falling behind in the growing market for graphics processing units (GPUs)” to companies such as Nvidia and has responded by embarking on a similar anticompetitive strategy.

The FTC said there is a dangerous probability that Intel’s unfair methods of competition could allow it to extend its monopoly into the GPU chip markets.

Last month, Intel agreed to pay Advanced Micro Devices $1.25 billion to settle the long-running legal dispute between the two chipmakers on antitrust and patent issues. AMD then agreed to drop all pending litigation against Intel.

“Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly. It’s been running roughshod over the principles of fair play and the laws protecting competition on the merits,” said Richard A. Feinstein, director of the FTC’s Bureau of Competition.

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