FTC settles complaint against Intel

On 4 August 2010 the U.S. Federal Trade Commission (“FTC”) approved a settlement with Intel Corp. on charges that the company violated Section 5 of the FTC Act by engaging in unfair methods of competition and deceptive acts and practices in commerce, including but not limited to exclusionary conduct subject to Section 2 of the Sherman Act. According to the FTC’s complaint, Intel unlawfully maintained its monopoly in the relevant Central Processing Unit (“CPU”) markets and attempted to acquire a monopoly in the relevant Graphics Processing Unit (“GPU”) markets as well as made deceptive disclosures regarding its compilers and the performance of CPUs (see Newsletter 6/2009, p. 2).

The settlement, subject to a period of public comments before finalization, would remedy Intel’s alleged exclusionary, unfair and deceptive practices as follows:

  • Intel would be prohibited from conditioning benefits to customers on them purchasing a certain share of CPUs, chipsets and/or GPUs from Intel or purchasing those products exclusively from Intel, or on a customer limiting, delaying or refusing its purchases from others than Intel. Intel would also be prohibited from threatening to retaliate against customers that do business with others than Intel, bundling CPUs with its chipsets at prices below Intel’s product cost, and offering lump sum payments for reaching a particular threshold of purchases from Intel.
  • Intel would be required to modify its licensing agreements with AMD, Nvidia and Via so that the companies gain better assurances on using third party foundries for chip production and against Intel filing patent infringement suits in case they undergo a change of control. Intel would also be required to offer Via a five year extension to their cross-licensing agreement. These remedies would allow the companies to expand their output by contracting production with chip foundries and to become stronger rivals by partnering with third parties.
  • Intel would be required to maintain an open PCI Express Bus Interface on its CPU platforms for six years and would be prohibited from limiting the graphics performance and General Purpose GPU functions of the bus. This would provide assurances to manufacturers of GPUs and other peripheral products that rely on the bus architecture and thereby maintain their incentives to innovate. In particular, this would allow the continued development of General Purpose GPU as an alternative computing architecture.
  • Intel would be prohibited from designing CPUs and GPUs that solely disadvantage the performance of competing or complementary products, that is, without demonstrated benefits to the Intel product in question. This would address allegations that Intel engaged in predatory design by cutting down access to its CPU and slowing down its competitors’ connections to the CPU.
  • Intel would be prohibited from disclosing inaccurate or misleading roadmaps and, a year after disclosing a roadmap, be required to respond to inquiries regarding potential roadmap changes. Intel would also be required to disclose to Nvidia which bus interfaces it will use. These remedies would address allegations that Intel misrepresented its roadmap especially Nvidia and would reduce uncertainty faced by manufacturers whose products interconnect with Intel’s platform.
  • Intel would be required to take steps to prevent misrepresentations concerning its compilers and libraries and to make certain disclosures regarding the reliability and relevance of certain performance benchmarks. These would address charges that Intel made deceptive disclosures regarding the relative performance of its CPUs.

The settlement achieves most of the remedies sought by the FTC in its complaint filed in December 2009. The settlement also extends beyond the recent decisions and settlements of antitrust cases involving Intel. The settlement, in particular, not only covers companies other than AMD which recently settled its antitrust suit with Intel but also addresses practices and products beyond the recent cases, such as the recent European Commission decision on exclusionary rebates and payments in the relevant CPU markets (see Newsletter 3/2009, p. 4). [Juha Vesala]