Correction to This Article
This article on a Federal Trade Commission antitrust lawsuit against computer chipmaker Intel incorrectly said that the Obama administration was filing the suit. The FTC is an independent agency and is not part of the executive branch.

U.S. files antitrust suit against Intel, alleges unfair tactics used against rivals

By Cecilia Kang and Steven Mufson
Washington Post Staff Writers
Thursday, December 17, 2009

The Obama administration sued chip giant Intel on Wednesday over a decade-long run of actions allegedly designed to stifle competition, opening a new front in the battle that big technology firms have been waging for years against antitrust challenges in Asia and Europe.

The Federal Trade Commission lawsuit resembles past cases brought against Intel by Japanese, Korean and European Union regulators over rival Advanced Micro Devices, and it adds new allegations that Intel rigged its microprocessors in a way that made it difficult for a competitor, Nvidia, to provide consumers with superior graphics abilities for computer games and video.

Intel denied the allegations, saying that it "competed fairly and lawfully" and that "its actions have benefited consumers."

The lawsuit marks a major step for President Obama toward fulfilling his 2008 presidential campaign promise to "reinvigorate antitrust enforcement." At the time, he criticized the Bush administration for "what may be the weakest record of antitrust enforcement of any administration in the last half century."

Other key antitrust tests lie ahead. The power of Google, Comcast's proposed takeover of NBC, and the market share of the makers of mobile phone handsets are all under examination by the Justice Department, the Federal Communications Commission or the FTC.

The technology industry, which has also been wooed by Obama, has been striving to resolve a string of antitrust actions in the United States and abroad. On Wednesday, the European Union ended its decade-long antitrust investigation of Microsoft after Microsoft agreed to market rival browsers as well as its own Internet Explorer. On Nov. 12, Intel paid $1.25 billion to rival AMD to drop antitrust and patent lawsuits as well as complaints filed with agencies, including the FTC. Many technology analysts were also cheered by the administration's decision to let software giant Oracle acquire Sun Microsystems, despite Oracle's dominant position in business software.

But the FTC on Wednesday alleged that Intel had used bullying tactics and payments to get computer makers such as Dell and Hewlett-Packard to use Intel chips instead of those made by AMD. The FTC complaint, the culmination of a one-year investigation, said "that Intel fell behind in the race for technological superiority in a number of markets and resorted to a wide range of anticompetitive conduct, including deception and coercion, to stall competitors until it could catch up."

The agency added that "Intel's anticompetitive tactics were designed to put the brakes on superior competitive products that threatened its monopoly."

The FTC isn't seeking monetary damages from Intel. "We are frankly more focused on conduct," Richard Feinstein, director of the FTC's bureau of competition, said in a news conference. Such remedies could include forcing Intel to share intellectual property with competitors.

The case could become a key test of antitrust law. Forged during the Progressive Era a century ago, antitrust legislation was designed to tame steel and oil monopolies, and was later applied to shoe and beer makers.

But under the influence of University of Chicago economists and others, courts began to worry about the harm antitrust enforcement actions could do to innovation and ultimately to the consumers they were supposed to protect. Over the past 15 years, federal courts have made it harder to show abuse of monopoly power and to win suits for treble damages. Judges taking a more skeptical view of antitrust actions have ranged from federal appeals court judges Richard A. Posner and Frank H. Easterbrook to Supreme Court Justice Stephen G. Breyer.

Applying antitrust to the tech sector has been particularly thorny because of falling prices, constant innovation and technology that often changes faster than it takes to litigate an antitrust case. Yet rarely have so few companies stayed so dominant in their fields as Microsoft, Intel, Oracle and now Google.

CONTINUED     1        >

© 2009 The Washington Post Company