The Federal Trade Commission filed a lawsuit against Intel Wednesday that accuses the world’s leading microprocessor maker of illegally stifling competition for more than a decade. By waging a systematic campaign to prevent competing microchips from gaining full access to the marketplace, the FTC said, Intel has deprived consumers of potentially superior chips at lower prices.
The FTC believes Intel’s tactics violate Section 5 of the FTC Act, which prohibits unfair methods of competition, as well as deceptive acts and practices in commerce. “We take seriously our mandate to find a violation of Section 5 only when it is proven that the conduct at issue has not only been unfair to rivals in the market but, more important, is likely to harm consumers,” said FTC Chairman Jon Leibowitz and Commissioner J. Thomas Rosch.
Coercing PC Makers
The lawsuit accuses Intel of engaging in an anticompetitive campaign based on “exclusive or restrictive dealing.” Among other things, the FTC charges that since 1999 the chipmaker has repeatedly employed a combination of threats and rewards to coerce the world’s largest PC makers into foregoing the use of chips from rivals such as Advanced Micro Devices or marketing any machines containing non-Intel computer chips.
“OEMs that purchased 100 percent or nearly 100 percent of their requirements from Intel were favored with guarantees of supply during shortages, indemnification from intellectual-property litigation, or extra monies to be used in bidding situations against OEMs offering a non-Intel product,” the FTC lawsuit says.
What’s more, the complaint contends that Intel secretly redesigned its key software compiler in a way that deliberately reduced the performance of rival computer processing unit (CPU) products, and deceived its customers and the public by failing to disclose this fact. “Many of Intel’s design changes to its software had no legitimate technical benefit and were made only to…