FTC settles case against Intel

4 Aug 2010

The US Federal Trade Commission has reached a settlement with Intel over allegations the semiconductor giant illegally stifled competition in the market for computer chips.

According to the FTC, Intel has agreed to provisions that will open the door to renewed competition and prevent Intel from suppressing competition in the future.

The FTC settlement applies to central processing units (CPUs), graphics processing units (GPUs) and chipsets, and prohibits Intel from using threats, bundled prices, or other offers to exclude or hamper competition or otherwise unreasonably inhibit the sale of competitive CPUs or GPUs.

The settlement also prohibits Intel from deceiving computer manufacturers about the performance of non-Intel CPUs or GPUs.

The FTC settlement goes beyond those reached in previous antitrust cases against Intel in a number of ways. For example, the FTC settlement order protects competition and not any single competitor in the CPU, graphics and chipset markets.

It also addresses Intel’s disclosures related to its compiler – a product that plays an important role in CPU performance. The settlement order also ensures that manufacturers of complementary products such as discrete GPUs will be assured access to Intel’s CPU for the next six years.

Challenging anti-competitive conduct

“This case demonstrates that the FTC is willing to challenge anticompetitive conduct by even the most powerful companies in the fastest-moving industries,” said FTC chairman Jon Leibowitz.

“By accepting this settlement, we open the door to competition today and address Intel’s anticompetitive conduct in a way that may not have been available in a final judgment years from now.

“Everyone, including Intel, gets a greater degree of certainty about the rules of the road going forward, which allows all the companies in this dynamic industry to move ahead and build better, more innovative products,” Leibowitz said.

The FTC sued Intel in December 2009, alleging that the company used anti-competitive tactics to cut off rivals’ access to the marketplace and deprive consumers of choice and innovation in the microchips that comprise computers’ central processing unit, or CPU.

Under the settlement, Intel will be prohibited from conditioning benefits to computer makers in exchange for their promise to buy chips from Intel exclusively or to refuse to buy chips from others.

Intel will also be prohibited from retaliating against computer makers if they do business with non-Intel suppliers by withholding benefits from them.

In addition, the FTC settlement order will require Intel to modify its intellectual property agreements with AMD, Nvidia, and Via so that those companies have more freedom to consider mergers or joint ventures with other companies, without the threat of being sued by Intel for patent infringement.

Intel will also have to offer to extend Via’s x86 licensing agreement for five years beyond the current agreement, which expires in 2013 and maintain a key interface, known as the PCI Express Bus, for at least six years in a way that will not limit the performance of graphics processing chips.

The chip giant must also disclose to software developers that Intel computer compilers discriminate between Intel chips and non-Intel chips, and that they may not register all the features of non-Intel chips.

Intel also will have to reimburse all software vendors who want to recompile their software using a non-Intel compiler.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years