Intel Calls FTC Suit 'Misguided' - InformationWeek

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12/16/2009
07:16 PM
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Intel Calls FTC Suit 'Misguided'

Chipmaker says Trade Commission's legal action has no basis in law.

Intel hit back at the Federal Trade Commission Wednesday, as the chipmaker called the agency's antitrust suit against it misguided and not based on existing law.

"The FTC's rush to file this case will cost taxpayers tens of millions of dollars to litigate issues that the FTC has not fully investigated," said Intel senior VP and general counsel Doug Melamed, in a statement.

"It is the normal practice of antitrust enforcement agencies to investigate the facts before filing suit. The Commission did not do that in this case," said Melamed.

Intel complained that the FTC's action has no basis in law, and that the agency is, in effect, making up rules as it goes along.

The suit, said Intel, "is explicitly not based on existing law but is instead intended to make new rules for regulating business conduct."

The FTC announced its suit against Intel earlier in the day, claiming the company uses its dominance to stifle competition in the market for microprocessors that run personal computers.

"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, 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," said Feinstein.

The FTC claimed Intel bullied computer manufacturers, including IBM, Hewlett-Packard, and Dell, into using its chips in their systems instead of offerings from rivals such as Advanced Micro Devices. It also claimed Intel used a tactic known as restrictive dealing to prevent system builders from marketing non-Intel machines.

The FTC's complaint further alleges that Intel redesigned its compiler software in a way that hampered the performance of competitors' microchips. The Commission said Intel's behavior violated Section 5 of the FTC Act, which prohibits unfair methods of competition.

The FTC is seeking an order that would prohibit Intel from "using threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its CPU or GPU chips," according to a statement released by the Commission.

New York attorney general Andrew Cuomo filed a similar suit against the company last month, accusing it of illegally paying PC makers to use its chips instead of AMD hardware.

Intel shares fell 2.17%, to $19.37, in Wednesday trading.

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