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FTC Announces Intel Antitrust Settlement Details

August 4, 2010

The Federal Trade Commission (FTC) announced on Wednesday that they have reached a settlement with Intel in the antitrust lawsuit filed against the company.

Under the terms of the settlement, the central processing unit (CPU) and graphics processing unit (GPU) manufacturer is prohibited from “using threats, bundled prices, or other offers to exclude or hamper competition or otherwise unreasonably inhibit the sale of competitive CPUs or GPUs,” according to an FTC press release dated August 4.

The terms of the settlement were announced by Trade Commission Chairman Jon Leibowitz and Bureau of Competition Director Richard Feinstein during a 10:00am EDT press conference from FTC Headquarters in Washington, D.C. The FTC approved the settlement terms by a vote of 4-0, with Commissioner William E. Kovacic recusing himself.

The settlement will prohibit Intel from providing benefits to computer makers in exchange for deals to exclusive purchase the company’s chipsets, as well as bans them from withholding certain benefits from PC manufacturers that choose to do business with companies other than Intel, including Advanced Micro Devices (AMD) and Nvidia.

The FTC is also forcing Intel to modify intellectual property agreements with competitors, maintain the PCI Express Bus Interface in a non-intrusive manner for the next six years, and disclose to software developers that they may not use all features of an Intel chipset when computers discriminate against chipsets manufactured by other companies.

According to Jia Lynn Yang of the Washington Post, the FTC “sued Intel in December, charging the firm illegally used its dominance in the chip market to strong-arm computer makers into using its microprocessors, rather than those made by rivals including Advanced Micro Devices.”

Earlier in the week, Associated Press Technology Writer Jordan Robertson reported that AMD “helped convince regulators around the world that Intel’s sales tactics harmed consumers and illegally injured rivals.” Intel reached a $1.25 billion settlement with AMD in late 2009, and had previously also been fined by the European Union.

The AP claims that Intel holds an 80-percent share of the central processing unit (CPU) market and 50-percent of the graphics processing unit (GPU) market. In their initial filing, the FTC claimed that “consumers have overpaid for computer chips because of Intel’s tactics to protect its dominance in both markets, such as paying computer makers to shun AMD’s chips and preventing future generations of Nvidia Corp.’s graphics chips from working with Intel’s chips,” noted Robertson.

Intel has repeatedly denied wrongdoing, and while neither side offered comment in advance of Wednesday’s settlement announcement, officials from the company had previously suggested that price cap restrictions had been discussed by the FTC. Similar cases are still pending in South Korea, as well as in New York’s state courts, according to AP reports.

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