FTC to charge Intel

With the US Justice Department tied up in its wrangling with Microsoft , the Federal Trade Commission, which shares antitrust responsibilities with Justice, has trained its sights on Intel, the other half of the Wintel duopoly. According to newspaper reports, the Commission will charge Intel with abusing its position as the monopoly manufacturer of microprocessor chips for PCs and bullying some computer manufacturers.

With the US Justice Department tied up in its wrangling with Microsoft , the Federal Trade Commission, which shares antitrust responsibilities with Justice, has trained its sights on Intel, the other half of the Wintel duopoly.

Intel's top executives at the company's annual stockholders meeting last week declined to comment on the ongoing investigation into the company's business practices, or on the antitrust lawsuit filed against Microsoft earlier in the week.

However, a court decision restricting Microsoft's capability to integrate functions into its operating system would have a devastating impact on CPU vendors, Paul Otellini, Intel executive vice president and general manager of the Intel Architecture business group said at a conference last week.

Intel does not envy Microsoft's collision with the government, Otellini said.

"Better them than us," Otellini said.

And although Intel agrees that companies have to be held accountable for their actions, prohibiting integration strikes at the heart of the semiconductor business, according to Otellini.

"The remedy is not to slow down integration," Otellini said.

Looking for a remedy, the FTC is preparing to file a major antitrust suit against Intel, according to a report in the New York Times. According to the Times, the Commission will charge Intel with abusing its position as the monopoly manufacturer of microprocessor chips for PCs and bullying some computer manufacturers, lawyers involved in the investigations said on Wednesday.

The suit will accuse Intel of selectively withholding key technical information about its microprocessors chips from the computer manufacturers with which Intel is involved in patent and related product disputes. Without that data, the manufacturers are unable to design new products.

According to FTC lawyers, later this year the FTC may file even more charges against Intel, accusing the company of using predatory pricing and contract provisions to expand its monopoly position and to squeeze its few competitors out of the market.

As early as Friday, the FTC staff is expected to forward its recommendation for the antitrust suit to the full commission for approval. The commissioners are expected to vote to move forward with the lawsuit a week or 10 days later.

An Intel representative said the company will not comment before the FTC announces its intentions. Intel has been cooperating with the commission, and is very sensitive about antitrust enforcement, the executive said.

According to the Times, lawyers involved with the investigation said Intel executives had attended meetings with FTC staff members in Washington earlier this month in an attempt to avert the lawsuit. But the Intel executives had not made any significant concessions, in the view of government officials, and insisted that all of their business practices were lawful.

Digital Equipment filed a lawsuit in May, 1997, charging Intel with willful infringement of 10 Digital patents. In an out-of-court settlement, Digital and Intel entered into a cross-license of patents, and Intel bought Digital's semiconductor manufacturing operations. The FTC cleared that agreement in April.

In another lawsuit, filed last November, Intergraph alleged that Intel is using its dominant market position to coerce the workstation manufacturer into giving up certain key patent rights.

In a preliminary injunction in April, a court found that Intel had violated antitrust law in the Intergraph case. Judge Edwin Nelson ruled that Intel is an "essential facility, similar to electrical power" and therefore does not have the right to supply crucial information to some companies but not to others.

The FTC will charge that Intel has engaged in a pattern of similar behavior involving at least two other companies, according to the Times.

Intel, in Santa Clara, Calif., can be reached at http://www.intel.com.

Andy Santoni is a senior writer at InfoWorld.

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