December 17, 2009 F.T.C. Accuses Intel of Trying to Stifle Competition By STEVE LOHR NY Times
http://www.nytimes.com/2009/12/17/technology/companies/17chip.html?_r=1&ref=technology&pagewanted=print 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. The filing goes beyond charges in cases brought recently by European regulators and the New York state attorney general in focusing on video graphics chips and software in addition to Intel’s core market, the microprocessors that sit at the heart of personal computers. Intel supplies about 80 percent of the PC microprocessor chips worldwide. The F.T.C. move, according to Andrew I. Gavil, a law professor at Howard University, is “very significant because it is broader in scope than any of the current cases.” In all, the F.T.C. contends that Intel engaged in a pattern of conduct that “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 in the wake of antitrust complaints in Europe and by 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 chief investigator, generating most of the evidence that was then used by government regulators around the world. Intel and the F.T.C. tried to reach a settlement, but those talks foundered in recent days. Intel contends that the F.T.C. staff brought up the graphics chip accusations and chip-related software late in the talks, asking about some details as recently as Dec. 8. The F.T.C. action, Intel’s general counsel, A. Douglas Melamed, was “misguided and unwarranted.” The case, Mr. Melamed said, “could have, and should have, been settled.” The changes that the F.T.C. is seeking, he added, amount to “new rules for micromanaging business conduct” and a potentially “dangerous turn for U.S. law.” The commission’s recommended remedial steps, spelled out in the complaint, Mr. Melamed said, would unfairly constrain Intel’s pricing and marketing, hinder product design and innovation, and force the company to give away its intellectual property. Wednesday’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 gives the commission “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 do extend beyond the charges in 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 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 the complaint, the F.T.C. said that Intel views the rising importance of graphics processing chips and their potential to supplant the central role of microprocessors in personal computers as a challenge to its monopoly in microprocessors. Intel’s tactics, the F.T.C. said, include making it more difficult for rivals’ graphics chips to work smoothly with Intel’s microprocessors. The complaint states that there was a “dangerous probability” that Intel’s unfair practices could allow it to gain a monopoly in graphics processing chips. 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. Mr. Feinstein, the F.T.C. official, disputed Intel’s claim that the graphics chip and software issues were late additions to its investigation, saying the company was aware of commission’s concern “some time ago,” with being more specific. When asked, Mr. Feinstein said politics played no role in the administrative complaint. He noted the commissioners voted 3-0 to go ahead with the complaint, with commissioner William E. Kovacic, recusing himself for an unspecified conflict. The unanimous vote, Mr. Feinstein said, “suggests this isn’t about politics.” Instead, he said, the F.T.C. is pursuing a company engaged “an anticompetitive course of conduct that continues to this day. That’s why we’ve stepped in.” -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu *********************************** * POST TO MEDIANEWS@ETSKYWARN.NET * *********************************** Medianews mailing list Medianews@etskywarn.net http://lists.etskywarn.net/mailman/listinfo/medianews
