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Intel Settles Competition Lawsuit With FTC

by Glen Shapiro,, New York

09 August 2010

The United States’ Federal Trade Commission (FTC) has settled charges of anti-competitive conduct against Intel Corp., which has also agreed to provisions designed to foster competition in the computer chip industry.

The FTC sued Intel in December 2009 alleging that the company used anti-competitive tactics to cut off rivals’ access to the marketplace and deprive consumers of choice and innovation in the microchips that comprise computers’ central processing units (CPUs). The action also challenged Intel’s conduct in markets for graphics processing units (GPUs) and other chips.

The FTC alleged that Intel’s anti-competitive practices violated Section 5 of the FTC Act, which is broader than the antitrust laws and prohibits unfair methods of competition and deceptive acts and practices in commerce. Unlike an antitrust violation, a violation of Section 5 cannot be used to establish liability for plaintiffs to seek triple damages in private litigation against the same defendant.

The FTC has now approved a settlement with Intel that resolves those charges. Furthermore, Intel has agreed to provisions that will open the door to renewed competition and prevent Intel from suppressing competition in the future.

The FTC settlement applies to CPUs, GPUs and chipsets, and prohibits Intel from using threats, bundled prices, or other offers to exclude or hamper competition or otherwise unreasonably inhibit the sale of competitive CPUs or GPUs. It also prohibits Intel from deceiving computer manufacturers about the performance of non-Intel CPUs or GPUs.

The settlement goes beyond those reached in previous antitrust cases against Intel in a number of ways. For example, the order protects competition and not any single competitor in the CPU, graphics, and chipset markets. It also addresses Intel’s disclosures related to its compiler – a product that plays an important role in CPU performance. The order also ensures that manufacturers of complementary products such as discrete GPUs will be assured access to Intel’s CPUs for the next six years.

“This case demonstrates that the FTC is willing to challenge anti-competitive conduct by even the most powerful companies in the fastest-moving industries,” said FTC Chairman, Jon Leibowitz. “By accepting this settlement, we open the door to competition today and address Intel’s anti-competitive conduct in a way that may not have been available in a final judgment years from now.”

“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,” he added.

TAGS: business | commerce | law | enforcement | e-commerce | legislation | United States | regulation

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