The US Federal Trade Commission (FTC) has filed an antitrust lawsuit against Intel, accusing the world's largest computer chip maker ofillegally using its dominant market position to stifle competition and strengthen its monopoly. Earlier this year, Intel was fined €1.06 billion by the EU for abusing its market position.
The FTC alleged that Intel has waged a "systematic campaign" to cut off rivals' access to the marketplace, depriving consumers of choice and innovation in the microchip industry.
Intel has fired back. The FTC's complaint is an effort to create "new rules for regulating and micro-managing business conduct," Intel senior vice president and general counsel Doug Melamed said .
Instead of filing a traditional antitrust complaint, the FTC alleged that Intel has violated Section 5 of the FTC Act prohibiting unfair methods of competition. The decision to file an FTC Act complaint, which covers more ground than an antitrust complaint, ignores decades of established antitrust guidance, Melamed said.
"Put simply, Intel has not violated the law," he added. "We have been sued today because we were not willing to agree to demands that would have been bad for our company, bad for the computer industry, and bad for consumers."
The FTC's decision to move forward with a case against Intel comes just a month after Intel settled antitrust and patent disputes with rival AMD. Intel agreed to pay AMD US$1.25 billion in the settlement.
Intel's tactics were designed to "put the brakes" on superior products from competitors, the FTC said. Intel's efforts have denied microchip customers access to potentially superior products and lower prices, the FTC's complaint said.
"Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," Richard Feinstein, director of the FTC's Bureau of Competition, said. "It's been running roughshod over the principles of fair play and the laws protecting competition on the merits. The commission's action today seeks to remedy the damage that Intel has done to competition, innovation, and, ultimately, the American consumer."
Intel, in a statement, disputed the FTC's allegations. "Intel has competed fairly and lawfully," the statement said. "Its actions have benefitted consumers. The highly competitive microprocessor industry, of which Intel is a key part, has kept innovation robust and prices declining at a faster rate than any other industry."
The case should have been settled, and settlement talks had progressed "very far but stalled when the FTC insisted on unprecedented remedies," Melamed, said in a statement.
Parts of the FTC complaint weren't brought to Intel's attention until 8 December, and were not fully investigated by the agency, Melamed said. "It is obvious from the complaint that the FTC does not understand important aspects of the computer industry," he added. "The FTC asks for remedies that would have made it impossible for Intel to conduct its legitimate business."
The FTC will not seek monetary penalties in the case, but instead will push for changes in Intel's competitive conduct, the FTC's Feinstein said. Possible remedies include changes in how Intel prices its products, limitations on bundling products, and possibly sharing intellectual property, he said.
Monetary damages weren't a top priority because the EU has brought a case against Intel seeking monetary damages, and New York state Attorney General Andrew Cuomo's investigation of Intel, launched in early 2008, could include monetary damages, Feinstein said. The AMD settlement also included a "substantial payment," he said.
"I don't think it was essential that the FTC seek additional monetary relief," Feinstein said. "We are really more focused on addressing the conduct and restoring robust competition."