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Intel Faces Antitrust Probe

Jun 9, 2008 | Parker Waichman LLP Intel Corp. is being investigated by the Federal Trade Commission (FTC) for improper business practices.  On Friday, the world's largest chipmaker disclosed that it had been subpoenaed by the FTC in an antitrust case which stemmed from years of complaints from Advanced Micro Devices (AMD), a smaller rival company, that Intel had improperly discouraged PC makers from using chips made by other companies. 

Three years ago, AMD sued Intel, alleging that the California-based tech company had illegally offered discounts and other payments to computer makers who were willing to boycott or limit their purchase of AMD processors.  Between them, AMD and Intel account for nearly all computer micro-processor sales, although Intel's share of that market is a whopping 80 percent.  It is illegal for a monopoly to prevent its customers from doing business with competitors, which is what AMD claims Intel does.

Intel says it has been cooperating with the FTC on the antitrust investigation since 2006, however that cooperation has been voluntary.  The subpoena means that Intel has now has no choice but to work with the FTC.  

According to the San Jose Mercury News, by opening a formal investigation, the FTC will be able to get access to documents in AMD's 3-year-old lawsuits against Intel, which until now have been kept confidential under a federal court's protective order.  AMD also announced last week that it had received an FTC subpoena Wednesday, seeking documents related to their claim against Intel.  

This is not the first investigation into Intel's business practices.  In January, New York Attorney General Andrew Cuomo began his own formal probe of Intel, accusing the company of "potential anti-competitive conduct.  Overseas, European Union regulators raided Intel's offices last February after charging that Intel engaged in illegal practices to discourage computer makers from using AMD chips.  Last Wednesday, South Korean authorities fined the company about $25 million, claiming it deterred competition by offering illegal discounts to South Korean computer makers so they wouldn't buy chips from AMD. And in 2005, Intel settled similar charges with the Japan Fair Trade Commission, even though the company said it disagreed with the commission's findings.

According to the San Jose Mercury News, experts do not expect the FTC to wrap up its Intel antitrust probe anytime soon, and contend it could take years.  Already, AMD's own antitrust lawsuit against Intel has been postponed until 2010.  If Intel is eventually found to have violated antitrust laws, it could face massive fines and be forced to change the way it sells chips.

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