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FTC accuses Intel of numerous violations, including writing software to sabotage its competitors' hardware

Intel holds a dominant position in the computer industry, with over 79.1 percent market share in the microprocessor market, according to iSuppli reports from the summer (these reports included by x86 architecture microprocessors as well as alternatives like ARM).  In May 2009 the European Union's antitrust regulators fined the chipmaker $1.45B USD -- about a fourth of the company's 2008 net income ($5.292B USD) -- for allegedly using discounts and OEM payoffs to push its smaller competitor Advanced Micro Devices out of the market.  That ruling is currently being appealed.

In the U.S. the Federal Trade Commission has investigated similar claims.  The State of New York has filed suit against the Santa Clara, Calif.-based company for antitrust violations, but thus far no federal litigation had been filed.  That all changed today with the FTC suing Intel, citing numerous antitrust violations.

The landmark case comes on the heels of Intel's $1.25B USD settlement with AMD over similar claims.  Under that agreement AMD agreed to drop all pending and present litigation against its rival.  According to the FTC's lawsuit filing, Intel is depriving customers of free choice and is stifling the progress of the computer industry.  The filing says that Intel employed a carrot-and-stick sort of approach, using both threats and rewards to keep OEMs from using its competitors' products.  Reportedly Intel used such targets on Dell Inc., Hewlett-Packard Co., and IBM Corp.

One of the more interesting aspects of the case is that the FTC claims to have evidence that Intel wrote compiler software (Intel makes one of the more commonly used commercial C++ code compilers, the Intel C++ Compiler) to sabotage the performance of its competitors' CPUs.  Little is known about this allegation at this point.

Richard Feinstein, director of the FTC's Bureau of Competition, says Intel's violations are blatant and alarming.  He states, "Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly.  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."

The FTC case looks to prevent Intel from employing "threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its" CPUs.

Intel was recently fined $25M USD by the South Korean government for antitrust violations.  The FTC's investigation of Intel was first announced officially in June 2008.  Under the more pro-antitrust Obama administration the investigation has pushed ahead aggressively and now looks to place new fines or restrictions on the chipmaker.

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RE: Kill the patents...
By killerroach on 12/16/2009 12:54:24 PM , Rating: 3
In terms of antitrust litigation you do not have to have a de facto monopoly, but rather enough market share to be able to negatively influence the normal business operations of your competitors. Depending on the industry, an antitrust lawsuit could be successfully argued against a company who didn't even have a majority of market share in their industry, but were able to, thanks to either collusion or advantageous vertical positioning, exert a stranglehold over competitive activity...

RE: Kill the patents...
By weskurtz0081 on 12/16/2009 12:59:43 PM , Rating: 3
Of course, that is absolutely true, I am just arguing against people who are using the terms incorrectly.

Intel is not a monopoly. They do have monopolistic power, but they are not a true monopoly. That's all I am saying.

The company though, is powerful enough to affect smaller players in the market in a negative way, which the company apparently did, but that doesn't make them a monopoly. They probably did violate antitrust law (Sherman/Clayton), but that doesn't require you to be a monopoly in the true sense of the word.

RE: Kill the patents...
By Motoman on 12/16/2009 1:25:56 PM , Rating: 2
You don't have to have a majority marketshare, or even a significant marketshare, to engage in antitrust activities.

If you have 1% of the market, and offer a customer cash on the side to NOT use a product from one of your competitors, you have just committed an antitrust offense.

"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer

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