Jon Leibowitz, FTC: Intel Settles Charges of Anticompetitive Conduct

August 4, 2010

The Federal Trade Commission approved a settlement with Intel that resolves charges the company illegally stifled competition in the market for computer chips. Intel has agreed to provisions that will open the door to renewed competition and prevent Intel from suppressing competition in the future.

The settlement goes beyond the terms applied to Intel in previous actions against the company and will help restore competition that was lost as a result of Intel’s alleged past anticompetitive tactics. At the same time, the settlement will leave the company room to innovate and offer competitive pricing.

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

The FTC settlement applies to Central Processing Units, Graphics Processing Units and chipsets and prohibits Intel from using threats, bundled prices, or other offers to exclude or hamper competition or otherwise unreasonably inhibit the sale of competitive CPUs or GPUs. The settlement also prohibits Intel from deceiving computer manufacturers about the performance of non-Intel CPUs or GPUs.

The FTC settlement goes beyond those reached in previous antitrust cases against Intel in a number of ways. For example, the FTC settlement order protects competition and not any single competitor in the CPU, graphics, and chipset markets. It also addresses Intel’s disclosures related to its compiler – a product that plays an important role in CPU performance. The settlement order also ensures that manufacturers of complementary products such as discrete GPUs will be assured access to Intel’s CPU for the next six years.

The FTC sued Intel in December 2009 alleging that the company used anticompetitive tactics to cut off rivals’ access to the marketplace and deprive consumers of choice and innovation in the microchips that comprise computers’ central processing unit, or CPU. These chips are critical components that often are referred to as the “brains” of a computer. The action also challenged Intel’s conduct in markets for graphics processing units and other chips.

The FTC alleged that Intel’s anticompetitive practices violated Section 5 of the FTC Act, which is broader than the antitrust laws and prohibits unfair methods of competition and deceptive acts and practices in commerce. Unlike an antitrust violation, a violation of Section 5 cannot be used to establish liability for plaintiffs to seek triple damages in private litigation against the same defendant.

Under the settlement, Intel will be prohibited from:

In addition, the FTC settlement order will require Intel to:

The FTC vote approving the proposed settlement order was 4-0, with Commissioner William E. Kovacic recused. The order will be subject to public comment for 30 days, until September 7, 2010, after which the Commission will decide whether to make it final.