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12/16/2009
09:38 AM
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FTC Sues Intel For Monopoly Tactics

Competition watchdog says chipmaker illegally bullied PC makers into using its chips.

The Federal Trade Commission sued Intel on Wednesday, claiming the chipmaker uses its dominance to stifle competition in the market for microprocessors that run personal computers.

"Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," said Richard Feinstein, director of the FTC's Bureau of Competition, in a statement.

"It's been running roughshod over the principles of fair play and the laws protecting competition on the merits. The Commission's action today seeks to remedy the damage that Intel has done to competition, innovation, and, ultimately, the American consumer," said Feinstein.

The FTC claimed Intel bullied computer manufacturers, including IBM, Hewlett-Packard, and Dell, into using its chips in their systems instead of offerings from rivals such as Advanced Micro Devices. It also claimed Intel used a tactic known as restrictive dealing to prevent system builders from marketing non-Intel machines.

The FTC's complaint further alleges that Intel redesigned its compiler software in a way that hampered the performance of competitors' microchips.

"Intel told its customers and the public that software performed better on Intel CPUs than on competitors' CPUs, but the company deceived them by failing to disclose that these differences were due largely to Intel's compiler design," the FTC stated.

The Commission said Intel's behavior violated Section 5 of the FTC Act, which prohibits unfair methods of competition.

The FTC is seeking an order that would prohibit Intel from "using threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its CPU or GPU chips," according to a statement released by the Commission. Intel has yet to issue a formal response to the charges.

The FTC isn't the only government body taking action against Intel. New York attorney general Andrew Cuomo filed a similar suit against the company last month, accusing it of illegally paying PC makers to use its chips instead of AMD hardware.

Intel shares were off 1%, to $19.80, in opening trading Wednesday.

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