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FTC and Intel announce a settlement

Chipmaker faces the music
Wed Aug 04 2010, 18:14

CHIPMAKER Intel has been handed a consent decree by the US Federal Trade Commission (FTC) to resolve a decade of alleged anti-competitive practices by the chip giant.

"Intel stepped way over the line," was the opening statement by FTC Chairman Jon Leibowitz. Leibowitz was unsurprisingly chipper during the conference, before he launched into Intel's monopolistic abuses in the x86 processor, graphics and chipset markets.

"This case demonstrates that the FTC is willing to challenge anticompetitive conduct by even the most powerful companies in the fastest-moving industries," said Leibowitz.

Leibowitz was also keen to stress that the consent agreement is also designed to promote healthy competition rather than merely to punish Intel.

"By accepting this settlement, we open the door to competition today and address Intel's anticompetitive conduct in a way that may not have been available in a final judgment years from now.

"Everyone, including Intel, gets a greater degree of certainty about the rules of the road going forward, which allows all the companies in this dynamic industry to move ahead and build better, more innovative products."

As we've reported previously, there are several points the consent agreement covers. When the FTC first issued a smackdown to Intel last year, it was over several anti-competitive practices.

First off were straight off technology-free anti-competitive practices. The FTC alleged that Intel made it difficult for third party foundries to manufacture competitive products. At the same time Intel apparently offered bungs and bundles to hamper competition and keep its customers from buying AMD chips. The FTC also claimed that Intel violated Section 5 of the FTC act, which looks at unfair methods of competition and deceptive acts in commerce.

In technological terms, Intel was apparently involved in dodgy benchmarking and compiler practices that affected performance of AMD and VIA CPUs, even though some of them were better products. Intel also restricted interoperability of VIA chipsets, the FTC alleged.

Under the settlement Intel has to pay $10 million over two years to software vendors that were damaged by its anti-competitive practices. Chipzilla will also have to stop offering inducements to PC and laptop makers to prevent them from buying competitors' products and not retaliate against them if they do.

In addition, Intel has to modify intellectual property agreements with AMD and Nvidia, freeing up joint ventures, while Intel can't sue for related patent infringements.

VIA's x86 licensing agreement will be extended for five years and the PCI Express Bus agreement will be operable for six years so it doesn't limit GPU performance. Finally, Intel has to offer full disclosure to software developers where its own compilers favour Intel hardware during benchmarking.

Leibowitz was keen to add the FTC could've whipped Intel if it came to litigation but it would've been at the expense of the consumer.

Richard Feinstein, director of the FTC bureau of competition said that by the time a lawsuit gets put into action, including running through the appeals courts, the decision could be "irrelevant".

"If litigation went forward, it would take another two years. By that time it would be irrelevant and consumers would suffer as a result," he said.

He has a point. The problem is that the world of IT is very fast moving and complicated. It would serve Intel right to wait another two years for litigation and a whooping fine. However, in two years the hardware and software architecture the FTC is seeking to protect might not exist anymore.

He also added that the FTC wouldn't hesitate to pursue Intel again and Intel can be fined if it violates the consent agreement.

"The FTC has no civil penalty or punitive damages authority, unless Intel violates the agreement. It is $16, 000 per violation so it adds up," added Leibowitz durng the open forum at the end of the conference.

In fact, the FTC said it is pushing to have the authority to fine in cases like this in the future. That way, the FTC could hand out fines similar to those the European Union Competition Commission can impose.

In May of 2009 the EU Commission fined Intel $1.45 billion and in November of last year Intel paid AMD $1.25 billion to settle a lawsuit. µ


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