FTC sues Intel over stifling competition

The Federal Trade Commission sued Intel Corp., Wednesday, accusing the chip titan of using illegal tactics to stifle competition. The administrative complaint could have a major impact on Intel, which the FTC alleged used illegal inducements or threats of retaliation to discourage computer makers from buying chips known as microprocessors, which serve as the brains in personal computers. Customers affected by Intel's alleged actions include Hewlett-Packard, IBM and Dell.

Intel denied the allegations which also included charges from the FTC that Intel is allegedly stifling competition in the three-dimensional images in computer games.

"Over a period going back to 1999, at each stage at which Intel's dominance in various chip markets has been threatened, they have responded, rather than by competing aggressively on the merits, with a course of conduct that has been exclusionary and detrimental to competition and consumers," Richard A. Feinstein, director of the FTC's bureau of competition, said at a news conference.

The possibility that the FTC would file suit against Intel has been rumored for months. It comes a month after Intel agreed to pay $1.25 billion in a legal settlement with AMD.  The FTC action seeks no monetary damages, but asks for an order that would bar Intel from many of its alleged practices. The alleged practices could have affected business in IT shops across the spectrum, according to many experts.

"This case could have, and should have, been settled," Doug Melamed, who was recently hired as Intel's senior vice president and general counsel, told the Wall Street Journal. "Settlement talks had progressed very far but stalled when the FTC insisted on unprecedented remedies-including the restrictions on lawful price competition and innovation set forth in the complaint-that would make it impossible for Intel to conduct business."

For more on the FTC's complaint against Intel:
- see this Wall Street Journal article