Intel, FTC Tentatively Settle Antitrust Dispute

Agreement resolves charges that chip maker illegally impeded competition, frames future competitive behavior.

Intel Corp. and the U.S. Federal Trade Commission (FTC) said that they have tentatively settled an antitrust dispute in which the agency charged the chip maker with illegally hindering competition in the market.

The FTC sued Intel on December 16, complaining that the company violated Section 5 of the FTC Act, a portion of the code that prohibits unfair and deceptive practices. On June 21, the two parties signaled their intention to hammer out a deal when they cut short trial preparations.

The agreement is subject to public comment until September 7 and subsequent final approval by the FTC. In settlement papers, Intel did not admit to violating the law nor acknowledge that the allegations in the FTC’s complaint are true.

"This agreement provides a framework that will allow us to continue to compete and to provide our customers the best possible products at the best prices," said Doug Melamed, Intel senior vice president and general counsel.

"The settlement enables us to put an end to the expense and distraction of the FTC litigation," he said.

In a statement, the FTC said that “Intel has agreed to provisions that will open the door to renewed competition and prevent Intel from suppressing competition in the future.”

Agreement details Intel’s competitive behavior in several key areas

The settlement, which applies to CPUs, graphics processors and chipsets, bans Intel from using threats, bundled pricing and other means to hinder competition or deceive computer makers about the performance measurements of competing products.

Intel also is barred from buying preferential treatment from computing makers, deals in which the chip maker allegedly closed off competition from other vendors in exchange for large sums of money, or from retaliating against hardware vendors who conduct business with Intel’s rivals.

The details of an arrangement along those lines, in which Intel paid Dell Inc. substantial amounts of money from 2002 – 2006 not to use chips from rival Advanced Micro Devices Inc. (AMD), recently came to light in the computer maker’s $100 million settlement with the U.S. Securities and Exchange Commission (SEC).

The agreement also compels Intel to restructure its intellectual property agreements with AMD, Nvidia Corp. and Via Technologies Inc. to enable those vendors to conduct business with other companies in the absence of legal threats from Intel.

In addition, Intel must inform customers when its compilers optimize software for its chips but not for compatible, competing products.

Intel must also maintain an interface known as the PCI Express Bus for at least six years in a manner not to limit the performance of graphics processing chips, enabling makers of compatible products to advance development initiatives.

FTC chairman Jon Leibowitz said that the Intel case “demonstrates that the FTC is willing to challenge anti-competitive conduct by even the most powerful companies in the fastest-moving industries.”

Leibowitz suggested that the settlement agreement accomplished what a trial may not have been able to reach.

"By accepting this settlement, we open the door to competition today and address Intel’s anticompetitive conduct in a way that may not have been available in a final judgment years from now,” he said.

“Everyone, including Intel, gets a greater degree of certainty about the rules of the road going forward, which allows all the companies in this dynamic industry to move ahead and build better, more innovative products.”

The FTC voted 4 – 0 to approve the proposed settlement, with Commissioner William E. Kovacic recused.

TAGS: Intel,AMD,antitrust,FTC,microprocessor

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