FTC files complaint against Intel Corp.

On 16 December 2009 the FTC issued an administrative complaint against Intel Corp. (“Intel”) claiming that Intel has violated Section 5 of the FTC Act through practices that harm competition in the relevant central processing unit (“CPU”) and graphics processing unit (“GPU”) markets (see press release and Docket No. 9341, In the Matter of Intel Corporation).

First, the complaint argues that Intel has engaged in unlawful practices in order to protect its monopoly power in the CPU markets. The alleged practices include Intel’s arrangements with computer manufacturers designed to limit the use of Intel’s competitors’ products, exclusionary discounts offered by Intel to original equipment manufacturers, the design of Intel’s compiler and library software so as to reduce the performance of competing CPUs, payments and other inducements to suppliers of complementary products to limit support of non-Intel CPU products as well as deceptive and misleading practices related to the performance and compatibility of competing CPUs.

Second, the complaint claims that Intel has engaged in illegal practices in the GPU and related markets, which threaten to eliminate the potential competition posed by GPUs to Intel’s dominance in CPUs, and which, further, carry a dangerous probability of Intel acquiring monopoly power also in the relevant GPU markets. These alleged practices include Intel’s deception regarding its competitors’ efforts to enable their GPUs to interoperate with Intel’s CPUs, discontinuing interoperability for some competitive GPUs, creating barriers to and degrading interoperability between CPUs and GPUs, misleading statements concerning the readiness of Intel’s GPU products, and the bundling and tying of GPUs with CPUs resulting in below-cost pricing.

The complaint also alleges that Intel has manipulated the contents and timing of industry standards to its own advantage, in particular, by delaying competitors’ access to standards.

The complaint claims Intel’s practices constitute stand-alone violations of Section 5 and, in part, simultaneous violations under the Sherman Act’s monopolization standards. In astatement of Chairman Leibowitz and Commissioner Rosch, the FTC’s rationale for the stand-alone Section 5 action is explained. Commissioner Rosch, in a separate statement, concurs with the Section 5 stand-alone action but dissents on bringing, in addition, the Sherman Act based claims.

The complaint follows the settlement by Intel and AMD of their antitrust and patent disputes (see Intel’s press release, 12 November 2009) and other recent antitrust agency actions (see e.g. Newsletter 5/2009 p. 5 for the European Commission’s decision). In November 2009, New York Attorney General Cuomo filed a complaint against Intel in the U.S. District Court of Delaware claiming that Intel has violated U.S. and state antitrust laws by engaging in a campaign to maintain its monopoly power in CPUs (see press release and complaint, 4 November 2009). [Juha Vesala]