FTC settles antitrust complaint against Intel

IDG News Service - WASHINGTON -- Intel has reached a proposed settlement with the U.S. Federal Trade Commission in the agency's antitrust complaint, with Intel prohibited from giving computer makers benefits for exclusively using its chips.

The settlement, announced Wednesday, also prohibits Intel, the world's largest chip maker, from retaliating against computer makers if they do business with other suppliers.

In addition, the settlement also establishes a $10 million fund, to be established over a two-year period, for software vendors to recompile their products for better performance with competing chips. The FTC alleged that Intel's actions caused software compiled on an Intel compiler to run more slowly on other chipsets.

"This is an exceptionally important case, and the commission was deeply troubled by Intel's actions," said Jon Leibowitz, the FTC's chairman, in a conference call with media Wednesday. "We accepted this settlement because it helps consumers."

The settlement requires Intel to rework its intellectual property agreements with competitors Advanced Micro Devices, Nvidia and Via Technologies and give them more freedom to consider mergers or joint ventures with other companies without the threat of patent infringement.

Intel must also offer to extend Via's x86 licensing agreement for five years beyond the current agreement, which expires in 2013, and it must maintain the open standard PCI Express Bus interface in a way that will not limit the performance of graphics processing chips for six years, the FTC said.

The settlement will "open the door" to new competition, Leibowitz said.

Intel did not admit to any wrongdoing as part of the settlement. The agreement has been accepted by the FTC for public comment and is a public document. Before it becomes final the agreement will be subject of a public comment period that will last 30 days.

"This agreement provides a framework that will allow Intel to continue to compete and to provide customers with the best possible products at the best prices," the company said. "The settlement enables Intel to put an end to the expense and distraction of the FTC litigation."

The FTC filed its complaint against Intel in December, saying the company had abused its dominance in the chip market and carried out a "systemic campaign" of threats and rewards to coerce computer makers like IBM, Dell and Hewlett-Packard into using fewer chips from AMD and Via Technologies.

According to the FTC, the tactics were designed to "put the brakes on superior competitive products" that threatened Intel's monopoly. The complaint mentioned AMD's Opteron server processors, released in 2003, as an example. Intel's conduct, carried out over the past decade, resulted in higher prices and less choice for consumers, the FTC said.