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Intel sued by the US Federal Trade Commission for decade long anti-competitive practices |
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The US Federal Trade Commission (FTC) has filed an antitrust-related lawsuit against Intel, charging it with decade-long illegal practices that leveraged its market position to repress competition. In its complaint, the FTC said that Intel “has engaged in a course of conduct that, considered individually or collectively, violates the provisions of said Act, and it appearing to the Commission that a proceeding in respect thereof would be in the public interest.” The FTC said it is filing the complain to challenge Intel’s unfair methods of competition and unfair acts or practices beginning in 1999 “and continuing through today”. It said Intel’s conduct during this period was designed to maintain Intel’s monopoly in the markets for Central Processing Units (CPUs) and to create a monopoly for Intel in the markets for graphics processing units (GPUs). As per its complaint, Intel holds a monopolistic position in the markets for personal computer and server CPUs, and has maintained a 75 to 85 percent unit share of these markets since 1999, while its share of revenues in these markets has consistently exceeded 80 percent. The case specifically names Intel's competitors AMD and Via Technologies as being unable to “constrain” Intel, along with a “handful” other x86 CPU manufacturers. It says that a number of CPU manufacturers exited the marketplace over the last decade, due to both Intel’s conduct and high barriers to entry in the CPU markets. What's more, the entry of a new player is unlikely, says the FTC. Referring to AMD, the FTC says that in 1999 after AMD released its Athlon CPU and again in 2003 after AMD released its Opteron CPU, Intel lost some of its technological edge in segments of the CPU markets as original equipment manufacturers (OEMs) started to shift to AMD's new products that had “surpassed Intel in terms of performance and quality of the CPU.” With its monopoly threatened, Intel engaged in a number of unfair methods of competition and unfair practices to block or slow the adoption of competitive products and maintain its monopoly to the detriment of consumers. The FTC said that amongst Intel's practices, Intel punished its own customers – computer manufacturers – for using AMD or Via products and used its market presence and reputation to limit acceptance of AMD or Via products. Intel is also accused of using deceptive practices to leave the impression that AMD or Via products did not perform as well as they actually did. The complaint goes on to provide a long list of Intel's practices that were counter productive to the health of the marketplace while preserving its monopolistic market position, including a significant part on graphic processors where chip maker Nvidia holds significant market share. "Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," Richard Feinstein, director of the FTC's Bureau of Competition, said in a statement. "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 is not looking to levy monetary penalties on Intel, but will instead push for changes in Intel's conduct with respect to the competition, Feinstein said. He said possible remedies could take the shape of changes in Intel's pricing of products, limitations on bundling products and even possibly sharing intellectual property. In a statement, Intel rebutted the FTC's allegations saying that it competed “fairly and lawfully". Intel said “The FTC's case is misguided. It is based largely on claims that the FTC added at the last minute and has not investigated. In addition, it is explicitly not based on existing law but is instead intended to make new rules for regulating business conduct. These new rules would harm consumers by reducing innovation and raising prices.” Intel senior vice president and general counsel Doug Melamed added, "This case could have, and should have, been settled. Settlement talks had progressed very far but stalled when the FTC insisted on unprecedented remedies – including the restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint -- that would make it impossible for Intel to conduct business." Chip makers AMD and Nvidia were reported to have found favor in FTC's complaint against Intel, hailing it as pro-consumer and cheered the decision. "The FTC's action against Intel is good news for consumers. It is yet another example of regulators around the globe acting to protect consumers by enforcing competition laws," AMD said in a statement. |
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