US authority sues Intel over anti-competitive practices

16 Dec 2009

The US Federal Trade Commission (FTC) is suing Intel over allegations that the computer chip maker has, over the past 10 years, illegally used its dominant market position to stifle competition and strengthen its monopoly.

In its complaint, the FTC alleges that Intel has waged a systematic campaign to shut out rivals’ competing microchips by cutting off their access to the marketplace.

According to the FTC complaint, Intel’s anti-competitive tactics were designed to put the brakes on superior competitive products that threatened its monopoly in the CPU microchip market.

“Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly,” said Richard Feinstein, Director of the FTC’s Bureau of Competition. “It’s been running roughshod over the principles of fair play and the laws protecting competition on the merits.”

Threats and rewards

The FTC’s complaint charges that Intel carried out its anti-competitive campaign using threats and rewards aimed at the world’s largest computer manufacturers, including Dell, Hewlett-Packard, and IBM, to coerce them not to buy rival computer CPU chips.

Intel also used this practice, known as exclusive or restrictive dealing, to prevent computer makers from marketing any machines with non-Intel computer chips, the FTC alleged.

Secretly redesigned software    

In addition, Intel also allegedly secretly redesigned key software, known as a compiler, in a way that deliberately stunted the performance of competitors’ CPU chips.

Intel told its customers and the public that software performed better on Intel CPUs than on competitors’ CPUs, but the company deceived them by failing to disclose that these differences were due largely or entirely to Intel’s compiler design, the FTC claimed.

Over the past decade, this strategy has succeeded in maintaining the Intel monopoly at the expense of consumers, who have been denied access to potentially superior, non-Intel CPU chips and lower prices,” the FTC said.

Intel is also facing charges in the US from the New York Attorney General over allegations of bribery and coercion.

Earlier this year, Intel was fined a record €1.06bn by the European Commission for violating anti-trust rules.

Last month, Intel agreed to pay its rival AMD US$1.25bn to settle all anti-trust and intellectual property (IP) disputes between the two.

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