US Report: FTC moving closer to action against Intel

In the shadow of the U.S. government's recent antitrust assault on Microsoft, the Federal Trade Commission may be on the verge of taking the next step in bringing its own antitrust action against Intel - the other half of the so-called "Wintel" duopoly.

In the shadow of the U.S. government's recent antitrust assault on Microsoft, the Federal Trade Commission may be on the verge of taking the next step in bringing its own antitrust action against Intel - the other half of the so-called "Wintel" duopoly.

FTC staffers are today expected to recommend a two-pronged suit against the world's leading microprocessor maker according to sources close to the investigation and published reports. After FTC investigators decide to bring a complaint, the staff forwards the issue to the full Commission for approval. The commission then votes on the matter.

If the action is OK'd by the commission - a process that could take a week to 10 days - it would launch charges that Intel, allegedly, misuses its dominant position by unfairly withholding chips and design plans from customers with whom it is also involved in patent disputes. A broader inquiry could come by Autumn. That inquiry is expected to focus on whether Intel stifles competition by adding new features to its chips that have been pioneered by the company's smaller competitors.

The action comes despite the FTC's recent approval of Intel's purchase of US firm Chips and Technologies and of Digital's semiconductor business.

FTC officials declined to comment on reports that the agency is prepared to file suit against Intel. But Intel's plans to integrate more technology into its processors, combined with its tightfisted control over the microprocessor market, could spur further action from the FTC, which has been investigating Intel on and off for the past seven years.

Intel has already been dealt one legal blow. Last month, an Alabama federal district court ruled that Intel cannot withhold early production chips and product information from Intergraph despite a lawsuit between the companies. In his judgment against Intel, Judge Edwin Nelson wrote: "Intel has used the threatened or actual termination of [nondisclosure agreements] as a contractual weapon, coercing customers ... to accede to Intel's demands and restraining competition."

The FTC action against Intel, if initiated, would differ from the antitrust suit brought on May 18 against Microsoft by the U.S. Dept. of Justice and 20 states.

The missions of the FTC and DoJ overlap to some degree. Both are charged with protecting the public and preventing anti-competitive behaviour. And both are enabled to prevent such behaviour by order of law. The FTC, however, is specifically charged under the Clayton Act with "preventing and eliminating unlawful tying contracts, corporate mergers and acquisitions and interlocking directorates." In addition the agency is authorised to prevent certain practices involving discriminatory pricing and product promotion.

The two agencies also differ in enforcement powers. Both will initially attempt to settle a case through consent decrees. Failing that, the Justice Department can take a case to the federal courts, as the DoJ has done with Microsoft.

By contrast, when the FTC files a complaint, it is initially sent to an administrative law judge, who functions much like a court. The FTC can file a cease-and-desist order, but it carries no criminal or civil penalties for past conduct, and the agency cannot assess damage.

A decision by the administrative law judge can be appealed to the full Commission, and then to the U.S. Court of Appeals. Violation of FTC orders carry civil penalties of up to $5,000 (£3,050) with each day of disobedience counted as a separate offence.

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