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FTC sues Intel over unfair competition

December 16, 2009

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The FTC today has sued chip maker Intel, accusing it of illegally using its dominant market position for the past ten years in an effort to compete unfairly and to further increase its enormous market share over its struggling rival AMD.

The U.S. Federal Trade Commission says Intel has waged a strong campaign to try to eliminate rivals' competing CPUs by reducing their access to the marketplace. An Intel spokesman said the company had just received the lawsuit, was evaluating it and would comment on it later today.

The lawsuit claims Intel used exclusive and restrictive agreements with some of the world's largest computer manufacturers, including IBM, Dell and HP to coerce them not to buy rival computer chips.

Intel also used the same practice to prevent PC manufacturers from marketing computers and servers with non-Intel computer chips.

The Santa Clara, CA company has denied similar allegations in the past, saying its practices benefit computers users by bringing innovations at lower prices. The FTC disagrees all such claims from Intel and have always done so in the past.

The added that Intel deprived consumers of choice and innovation in the CPU microchips. These are critical components that often are referred to as the heart of a computer. According to the FTC complaint, Intel's anticompetitive tactics were designed to greatly slow down superior competitive products such as AMD's CPUs that threatened its monopoly in the microchip market.

Previous and similar lawsuits focused on Intel, Advanced Micro Devices and central processing units (CPUs), but today's FTC case adds a new element: graphical processing units (GPU) such as those from chipmaker Nvidia and others.

"Intel once again finds itself falling behind the competition--this time in the critical market for graphics processing units, commonly known as GPUs, as well as some other related markets. These products have lessened the need for powerful CPUs and therefore pose a real threat to Intel's monopoly stance. Intel has responded to this competitive challenge by embarking on a similar anticompetitive strategy, which aims to preserve its CPU monopoly by smothering potential competition from GPU chips such as those made by Nvidia and a few others," the FTC said in its statement.

"As part of this latest campaign, Intel grossly misled and deceived potential competitors such as AMD in order to protect its own monopoly," added the FTC.

Furthermore, the complaint also alleges that there also is a dangerous probability that Intel's unfair methods of competition could allow it to extend its monopoly into the GPU chip markets as well in the next 5 to 6 months.

The lawsuit comes about a month after the State of New York filed a federal antitrust lawsuit for very similar reasons. In November, Intel also agreed to pay rival AMD over $1.249 billion to settle similar claims. Intel meanwhile is appealing a $1.45 billion fine imposed by antitrust authorities in Europe.

There's no doubt that Intel lawyers are busy and will continue to be over the next several months.

The FTC also alleges that Intel even designed specific software that was deliberately engineered to function better on a system running an Intel processor rather than a competitor's such as AMD.

Overall, the FTC voted 3 to 0 on the complaint, which alleges that Intel engaged in illegal monopolization, unfair trade, unfair methods of competition and deceptive tactics in conducting business in the global IT industry.

Additionally, Intel was hit with even more charges alleging it abused its overall dominance of the CPU market, this time from New York's attorney general, whose complaint includes a series of revealing and compromizing e-mails between some of the technology industry's most powerful executives at Intel.

The lawsuit filed by New York's attorney general in November alleges that Intel threatened computer manufacturers including IBM, H-P, Dell and Acer that were paid billions of dollars in kickbacks to stop them from using a competitor's products, namely American Micro Devices' CPU chips.

The FTC is seeking nothing less than a court injunction that would prevent Intel from using such threats, bundled prices or other similar offers to encourage exclusive contracts, hamper competition or that unfairly manipulate the prices of its semiconductors in the computer and server industry.

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Source: Linux News Today.