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The Chips are Down: FTC Files Antitrust Complaint Against Intel

There is one group of people with job security in Silicon Valley these days, and that's the legal team at chip giant Intel. No sooner than a cease fire in the decades-old war with major rival AMD is announced, a new fight breaks out with the FTC over alleged anti-competitive practices. Oh, and there is a small matter to settle over unfair business practices with European regulators and a suit by New York AG Andrew Cuomo, but that's another story. Or two.

Today, the FTC announced that despite settlement talks with Intel, it has filed its complaint against the company, citing "illegal monopolization, unfair methods of competition and deceptive acts and practices in commerce." This broad language doesn't quite reveal what is likely to be the crux of the action, issues surrounding Intel's product pricing, whether it purposely designed its software to run better on computers containing its chips than on machines containing its competitor's products, and alleged threats it made to major computer suppliers (such as Dell and HP) to coerce them into using Intel chips in their products.

According to Keith Hylton, antitrust professor at Boston University's school of law, the FTC may have a tough time proving its case that Intel manipulated its prices to cut out competition. However the issue over design, which was the core of the United States' landmark case against Microsoft earlier this decade, will likely be more successful.

In addition to the allegations in the FTC's complaint, the Commission is concerned about where the empire will strike next. They have their eye on Intel's actions in the graphics processing unit (GPU) market and are concerned that Intel will take its monopolistic practices to this new arena. Needless to say, up and coming graphics chip maker Nvidia, "applaud[s] today's action by the U.S. Federal Trade Commission."

As always, Intel came out swinging. In its press release this morning, the company called the FTC case "misguided." Intel senior vice president and general counsel Doug Melamed added, "Settlement talks had progressed very far but stalled when the FTC insisted on unprecedented remedies – including the restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint -- that would make it impossible for Intel to conduct business."

AMD had no comment.

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