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U.S. FTC files formal complaint against Intel

Intel waged a 'systematic campaign' to cut off rivals' access to the marketplace, the agency says

By , IDG News Service
December 16, 2009 09:31 AM ET

IDG News Service - The U.S. Federal Trade Commission has filed an antitrust lawsuit against Intel, charging the world's largest computer chip maker with illegally using its dominant market position to stifle competition and strengthen its monopoly for a decade.

Intel and antitrust: A brief history

The FTC alleged that Intel has waged a "systematic campaign" to cut off rivals' access to the marketplace. Intel deprived consumers of choice and innovation in the microchip industry, the FTC alleged.

The FTC's complaint is an effort to create "new rules for regulating and micro-managing business conduct," Intel senior vice president and general counsel Doug Melamed said during a press conference.

Instead of filing a traditional antitrust complaint, the FTC alleged that Intel has violated Section 5 of the FTC Act prohibiting unfair methods of competition. The decision to file an FTC Act complaint, which covers more ground than an antitrust complaint, ignores decades of established antitrust guidance, Melamed said.

"Put simply, Intel has not violated the law," he added. "We have been sued today because we were not willing to agree to demands that would have been bad for our company, bad for the computer industry, and bad for consumers."

The FTC's decision to move forward with a case against Intel comes just a month after Intel settled antitrust and patent disputes with rival Advanced Micro Devices. Intel agreed to pay AMD $1.25 billion in the settlement.

Intel's tactics were designed to "put the brakes" on superior products from competitors, the FTC said. Intel's efforts have denied microchip customers access to potentially superior products and lower prices, the FTC's complaint said.

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

Intel, in a statement, disputed the FTC's allegations. "Intel has competed fairly and lawfully," the statement said. "Its actions have benefitted consumers. 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."

Intel called the FTC case "misguided," and said the complaint was based largely on claims the FTC added "at the last minute." The complaint is "explicitly not based on existing law but is instead intended to make new rules for regulating business conduct," Intel said. "These new rules would harm consumers by reducing innovation and raising prices."

The case should have been settled, and settlement talks had progressed "very far but stalled when the FTC insisted on unprecedented remedies," Melamed, said in a statement.

Parts of the FTC complaint weren't brought to Intel's attention until Dec. 8, and were not fully investigated by the agency, Melamed said. "It is obvious from the complaint that the FTC does not understand important aspects of the computer industry," he added. "The FTC asks for remedies that would have made it impossible for Intel to conduct its legitimate business."

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