FTC Targets Intel with Antitrust Claims

The Federal Trade Commission (FTC) has recently filed a lawsuit against Intel Corporation, alleging that the computer chip manufacturer waged a systematic campaign to shut out its rivals by cutting off their access to the marketplace.

In doing so, the FTC believes that Intel deprived consumers of choice and innovation, and that Intel's anti-competitive tactics were designed to stop competitive products that threatened its monopoly in the CPU (Central Processing Unit) microchip market. (Source: ftc.gov)

Success at the Expense of Consumers

According to the FTC complaint, Intel's strategy succeeded in maintaining its monopoly at the expense of consumers.

Richard A. Feinstein, Director of the FTC's Bureau of Competition, says that "Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly." Feinstein believes that Intel has been running roughshod over the principles of fair play. (Source: ftc.gov)

Threats and Rewards to Manufacturers

The FTC charges that Intel carried out its anti-competitive campaign by using threats and rewards that were aimed at the world's largest computer manufacturers, including Dell, Hewlett-Packard, and IBM in order to coerce them into not buying rival computer CPU chips.

Intel used exclusive or restrictive dealings to prevent computer makers from marketing machines that did not contain Intel CPU chips. (Source: ftc.gov)

Stunted Compiler Performance

The FTC also alleges that Intel used secretly designed compilers to deliberately stunt the performance of its competitors' CPU chips.

While telling its customers and the public that software performed better on its CPUs than its competitors, Intel deceived them by not disclosing that the differences were due in large part or entirely to Intel's compiler design.

Deceptive Methods Extended into GPU Market

Once Intel caught up to competitors like Advanced Micro Devices (AMD) in the CPU market, Intel found itself falling behind the competition in the Graphics Processing Unit (GPU) market and some other related markets. Since those products lessen the need for CPUs, they pose a threat to Intel's CPU monopoly. (Source: ftc.gov)

FTC Seeks to Remedy Intel's Anticompetitive Damages

The FTC issues a complaint when it has reason to believe that the law has been or is being violated, and when it appears that a proceeding is in the public interest. The issuance of a complaint by the FTC is not a finding or ruling that the respondent violated the law.

The FTC is seeking an order that includes provisions preventing Intel from using threats, bundled prices, or other offers that encourage exclusive deals, hamper competition, or unfairly manipulate the prices of CPU or GPU chips to remedy Intel's alleged anti-competitive damage.

The FTC may also seek an order that prohibits Intel from unreasonably excluding or inhibiting the sale of competitive CPUs or GPUs, and prohibiting Intel from distributing or making products that impair the performance -- or apparent performance -- of its competitors' CPUs or GPUs.

A hearing is tentatively scheduled for September 15, 2010 at 10:00 a.m.

More information can be found on the FTC's website.

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