F.T.C. Accuses Intel of Trying to Stifle Competition
The Federal Trade Commission on Wednesday sued the chip maker Intel, accusing it of using its dominant market position “to stifle competition and strengthen its monopoly.”
In its complaint, the F.T.C. accused the chip maker of a systematic campaign to block rivals from selling their microchips by cutting off access to the market.
In doing so, the agency said in a statement, Intel “put the brakes on superior competitive products that threatened” its microchip market share.
“Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly,” said Richard A. Feinstein, director of the agency’s Bureau of Competition. “It’s been running roughshod over the principles of fair play and the laws protecting competition on the merits.”
The F.T.C. action comes after a yearlong investigation and follows recent antitrust complaints against Intel by European regulators and the New York attorney general, Andrew M. Cuomo. But the F.T.C. move also comes a month after Intel reached a sweeping $1.25 billion settlement with its longtime rival in the chip market, Advanced Micro Devices.
That settlement, covering both private antitrust and patent claims, was seen as possibly deterring the F.T.C. from moving ahead. In its long-running legal fight with Intel, A.M.D. was both the leading victim of the giant chip maker and its investigation generated most of the evidence that was then used by government regulators around the world.
A law professor at Howard University, Andrew I. Gavil, said the start of the case was “very significant because it is broader in scope than any of the current cases.”
Tuesday’s complaint is being made under a statute giving the agency powers to combat anticompetitive conduct that might not fit neatly or immediately into the nation’s main antitrust laws, the Sherman Act and the Clayton Act. In its complaint, the F.T.C. noted that the statute covering the commission gives it “a unique role in determining what constitutes unfair methods of competition.”
The complaint is an administrative action, which will be heard before a single administrative law judge within the F.T.C., with the trial starting in September 2010. That ruling can be appealed to the commissioners acting as judges, and later to a federal appeals court — unless Intel reaches a settlement somewhere along the way.
The F.T.C. staff filing is a 24-page enumeration of Intel’s reported anticompetitive acts. It contains no quotes from seemingly incriminating e-mail messages or notes of conversations between Intel executives and personal computer makers, as did the New York state complaint, for example.
But the F.T.C. accusations seem to be broader than the other pending complaints, which have focused mainly on claims that Intel has systematically used large rebates and co-marketing arrangements to persuade computer makers to use its chips instead of those by A.M.D. And those cases centered on the market for microprocessors, the chips that sit at the heart of personal computers. Intel supplies about 80 percent of PC microprocessor chips worldwide.
The F.T.C. complaint accuses Intel of taking a series of steps to hinder competition in the market for graphics processing chips, which are increasingly important in running video and movies on computers. These graphics processing chips are made by companies including Nvidia, A.M.D. and Via.
In a statement, Nvidia said Wednesday that it was “particularly pleased to see scrutiny being placed on Intel’s behavior” toward the graphics chips.
The F.T.C. filing also asserts that Intel “secretly redesigned key software” in a way that deliberately stunted the performance of competitors’ chips.
