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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

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The FTC will not seek monetary penalties in the case, but instead will push for changes in Intel's competitive conduct, the FTC's Feinstein said during a press conference. Possible remedies include changes in how Intel prices its products, limitations on bundling products, and possibly sharing intellectual property, he said.

Monetary damages weren't a top priority because the European Union has brought a case against Intel seeking monetary damages, and New York state Attorney General Andrew Cuomo's investigation of Intel, launched in early 2008, could include monetary damages, Feinstein said. The AMD settlement also included a "substantial payment," he said.

"I don't think it was essential that the FTC seek additional monetary relief," Feinstein said. "We are really more focused on addressing the conduct and restoring robust competition."

AMD cheered the decision. "The FTC's action against Intel is good news for consumers. It is yet another example of regulators around the globe acting to protect consumers by enforcing competition laws," AMD said in a statement.

The FTC complaint comes after "a multiyear investigation, extensive discussions within the commission and multiple meetings with Intel" and other interested parties, Commissioners Jon Leibowitz and J. Thomas Rosch said in a joint statement.

"Broadly speaking, the complaint alleges that Intel fell behind in the race for technological superiority in a number of markets and resorted to a wide range of anticompetitive conduct, including deception and coercion, to stall competitors until it could catch up," the joint statement said. "If the allegations in the complaint are true, Intel's actions over a period of years and continuing up until today have diminished competition and harmed consumers."

The FTC's complaint, tentatively scheduled to be heard by an FTC administrative judge on Sept. 8 next year, alleges that Intel used threats and rewards with the world's largest computer makers, including Dell, HP and IBM, in an effort to "coerce" them not to buy rival CPU chips.

Intel used several tactics to keep computer makers from using rival CPUs, the FTC complaint said. The company threatened to increase prices, end technology collaborations, shut off supply and reduce marketing support to manufacturers that purchased too many products from Intel's competitors, the complaint said.

Manufacturers that purchased nearly all their CPUs from Intel received guarantees of supply during shortages, indemnification from intellectual property lawsuits and extra money to be used in bids against vendors offering non-Intel products, the complaint said.

Intel also offered volume discounts selectively to manufacturers, and it redesigned its compiler and library software in about 2003 to reduce the performance of computing CPUs, the FTC said.

Intel also paid or otherwise induced suppliers of complementary software and hardware products to eliminate or limit their support of non-Intel CPU products, and the company "misled " the public about the effects of its redesigned compiler on rival's CPUs and on industry benchmarks reflecting the performance of its CPUs compared with those of rivals, the FTC said.

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