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8/30/2007
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Antitrust Group Asks FTC To Put The Heat On Intel

The American Antitrust Institute piggybacks off of a European Commission report that claims Intel offered substantial rebates to equipment manufacturers to edge out competition from AMD.

The American Antitrust Institute, a nonprofit Washington, D.C., advocacy group, asked the Federal Trade Commission this week to take a more active role in checking Intel's anti-competitive practices against rival Advanced Micro Devices.

AAI President Albert A. Foer sent a letter this week to FTC Chairwoman Deborah Platt Majoras, requesting that the agency take a close look at Intel, now that the European Commission has issued a preliminary finding that Intel has abused its dominant position in the market. "We at the American Antitrust Institute strongly encourage the Federal Trade Commission to weigh in on this conduct that has so long gone unchecked," Foer said.

The European Commission in July notified Intel that the commission believed the chipmaker acted improperly in trying to exclude AMD from the market. Foer said Intel is "clearly a monopolist" in the microprocessor manufacturing industry, so "it becomes especially important to be vigilant against strategies by the dominant firm that might eliminate or cripple its only rival's ability to gain substantial market share as a result of its hard-won and pro-competitive innovations and efficiency."

The AAI was particularly concerned with the EC's findings that Intel offered substantial rebates to equipment manufacturers that agreed to buy all or the great majority of processors from Intel. The group also pointed out that Intel's practices have been challenged in Japan and Korea. Intel reached a settlement with Japanese regulators in 2005. The Korean investigation is pending.

"The U.S. government -- especially the FTC -- should reclaim its traditional role as the leading antitrust enforcer, especially when it is two U.S. corporations that are involved and the rest of the industrialized world is so concerned," Foer said.

The EC listed two other Intel practices that appeared anti-competitive: making payments to induce manufacturers to delay or cancel the launch of a product line using AMD processors, and offering chips well below cost in competing for contracts against AMD in the server market.

Chuck Mulloy, corporate spokesman for legal affairs for Intel, told InformationWeek Thursday the company disagrees with the AAI's interpretation of laws governing competition. Mulloy also pointed out that AMD contributes to the AAI. "It does not surprise us that they sent a letter to the commissioner, because AMD is a paid member of that organization," Mulloy said.

The AAI disclosed in its letter to the FTC that it receives contributions from a wide variety of sources, including AMD and other high-tech companies.

Mulloy also objected to AMD circulating the AAI letter to the media via e-mail. "The fact that AMD is forwarding the letter to members of the media is just another reflection of AMD's marketing campaign with respect to its pending litigation in the United States," Mulloy said.

In March of 2005, AMD filed its federal antitrust suit against Intel in Delaware. The trial is scheduled for April 2009.

Mulloy, who was in Europe meeting with Intel lawyers in the EC case, said the company hadn't decided how to respond to the complaint. Intel has six weeks left to provide a formal response. It could also ask for an extension, or request an oral hearing. If the commission finds against Intel, it could require the company to cease the alleged practices and impose a fine.

The AAI's request and EU accusations aren't the only regulatory challenges that Intel is facing these days. The Federal Trade Commission has asked for additional information in its review of a proposal by Intel and STMicroelectronics to build a multibillion-dollar semiconductor company focused on making flash memory products.

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