Intel settles FTC antitrust lawsuit, squashes widest-ranging charges; details pending

By Jordan Robertson, AP
Tuesday, August 3, 2010

Intel, FTC settle antitrust case, as expected

SAN FRANCISCO — Intel Corp. has settled an antitrust lawsuit filed against it by the Federal Trade Commission.

The two sides confirmed the settlement late Tuesday and the FTC scheduled a news conference for Wednesday morning to release details. Neither side would comment further.

With the settlement, which was expected, Intel is sweeping away one of the last reminders of a bitter, yearslong campaign by a major rival that caused the world’s biggest semiconductor company a world of legal pain.

The rival — Advanced Micro Devices Inc. — helped convince regulators around the world that Intel’s sales tactics harmed consumers and illegally injured rivals. Intel is accused of bullying computer makers into avoiding rivals’ chips and sabotaging rivals’ attempts to get their chips to work with Intel’s.

The FTC lawsuit is the harshest Intel has faced, and with the settlement the FTC could impose the strictest rules yet on Intel’s behavior, potentially leading to lower prices that people pay for computers.

In the lawsuit filed in December 2009, the FTC accused Intel of wrongdoing in the markets for both central processing units (CPUs) and graphics processing units (GPUs).

Intel owns about 80 percent of the world’s market for CPUs — the “brains” of computers. It owns more than 50 percent of the market for GPUs — chips specially designed to make graphics look good on computer screens.

The FTC claims consumers have overpaid for computer chips because of Intel’s tactics to protect its dominance in both markets, such as paying computer makers to shun AMD’s chips and preventing future generations of Nvidia Corp.’s graphics chips from working with Intel’s chips.

Intel claims the semiconductor market is competitive and functioning normally, and that its sales tactics are legal and that chip prices have fallen because of its technological advances.

Unlike other antitrust cases against Intel, the settlement with the FTC could mean the biggest set of changes for how Intel does business.

The FTC had apparently been aggressive in demanding that Intel change its ways. Talks had earlier broken down over what Intel’s general counsel, Doug Melamed, described as “unprecedented remedies … that would make it impossible for Intel to conduct business,” such as restrictions on Intel’s prices.

Intel’s legal challenges aren’t over. It is still fighting a record $1.45 billion antitrust fine in Europe and separate cases in South Korea and New York state.

But so far it appears its beef with AMD is squashed. Last year, Intel paid $1.25 billion to settle AMD’s lawsuit and agreed it wouldn’t use financial incentives to pressure computer makers into limiting their use of AMD chips — something Intel has always said it wasn’t doing anyway.

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