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FTC suit against Intel inevitable, analysts say

FTC suit against Intel inevitable, analysts say

The US Federal Trade Commission (FTC) declined to confirm reports yesterday that it plans to subject Intel to a two-pronged antitrust suit, and industry analysts and an antitrust lawyer were divided over whether or not such a case is likely to be brought.

Intel makes an estimated 90 per cent of the chips that power the world's personal computers, which last year brought it revenues of $US25.1 billion. Its market share already has attracted the attention of the FTC, which is now considering two antitrust lawsuits against the chip giant, according to reports published in USA Today.

One suit, which may be filed within weeks, would accuse the chip maker of unfairly withholding information about its products from companies with which it is having disputes, the report states. The other would accuse it of requiring companies who buy its chips to purchase additional Intel devices, according to the reports, which cite unnamed sources close to the FTC.

A decision to bring charges against Intel, if indeed made by the FTC, may have been prompted by a preliminary injunction awarded earlier this month against the company in a suit filed by workstation maker Intergraph in US district court for the Northern District of Alabama, analysts said.

In that case, the court ordered Intel to provide Intergraph with access to advanced product information and technical support after Intergraph accused Intel of using access to certain non-disclosure agreements and contracts to coerce it into relinquishing patent licenses.

Intergraph claims Intel's actions cost it $US100 million in lost sales. Intel has appealed the injunction.

But one veteran antitrust litigator is not convinced a lawsuit against Intel is imminent, in part because the chip giant is in a market with competitors that provide compatible products.

Before filing a suit the FTC would first have to show that Intel is a monopoly, which is not as simple as showing that it has 90 percent market share. The legal definition of monopoly requires the FTC to show that Intel could raise its prices without decreasing its market share, or that cutting its supply of chips to the market would have the effect of raising the market price for its products.

Intel also was accused by Digital of denying it access to chip specifications while the companies were embroiled in legal disputes last year, analysts noted. Those charges were resolved through a settlement between the companies in which Digital agreed to sell its semiconductor assets to Intel for $US700 million.


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