Intel settles with FTC, cleaning up antitrust troubles as chip maker ducks long legal fight

By Jordan Robertson, AP
Tuesday, August 3, 2010

In FTC deal, Intel cleaning up antitrust woes

SAN FRANCISCO — The Federal Trade Commission’s antitrust lawsuit against Intel Corp. was the harshest yet against the world’s biggest semiconductor maker, which has been battling regulators around the world over charges its tactics hurt consumers.

The severity of Intel’s punishment will be revealed Wednesday morning, when the FTC reports details of a settlement between the two sides. The FTC could impose the strictest rules yet on Intel’s behavior, potentially leading to lower prices that people pay for computers.

Neither the FTC nor Intel would comment Tuesday beyond confirming the settlement.

The settlement, which was expected, lets Intel sweep away one of the last reminders of a bitter, yearslong campaign by a major rival — Advanced Micro Devices Inc. — that caused Intel a world of legal pain.

AMD helped convince regulators around the world that Intel’s sales tactics harmed consumers and illegally injured rivals. Intel, the world’s biggest semiconductor company, is accused of bullying computer makers into avoiding rivals’ chips and sabotaging rivals’ attempts to get their chips to work with Intel’s.

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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