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  FTC Approves Intel Deal

By David Lawsky
Wednesday, March 17, 1999; 2:12 p.m. EST

WASHINGTON — The Federal Trade Commission settled antitrust charges against Intel Corp. Wednesday, approving an agreement that bars the chip maker from severing business ties with customers who sue it.

"If you have an intellectual property dispute, Intel cannot cut you off," said FTC Chairman Robert Pitofsky at a news conference after the 3-0 vote. Without the agreement, Pitofsky said Intel was able to use monopoly power to muscle customers into giving up trade secrets to Intel without compensation.

Intel carved out an important exception that had not been made public last week, when the FTC announced a staff agreement on the eve of a major antitrust trial against Intel.

Under the exception, if a customer sues Intel and seeks an injunction to prevent the company from selling its chips, then Intel is free to withhold samples and technical information that the customer needs to stay in business.

Pitofsky said that achieving a balance waw important because no company would be permitted to shut down the other.

"We're not on Intel's side, we're not on the challenger's side," Pitofsky said. "We're on the consumer's side."

The public has 60 days to comment on the settlement, after which the commission is expected to make it final.

The FTC had alleged that Intel withheld information and product samples from Intergraph Corp., Compaq Computer Corp.and Digital Equipment Corp., which has since been purchased by Compaq.

Intel was trying to coerce the firms into licensing their patented inventions to Intel, the FTC charged.

All of the parties involved — the FTC, Intel, Compaq and Intergraph — expressed satisfaction with the agreement.

In the final agreement, Intel did not have to admit it was a monopolist. That is important because an admission that Intel holds a monopoly would make it easier for others to win suits against the Santa Clara, Calif.-based firm.

Intel President and Chief Executive Craig Barrett said in a statement the company was "very gratified that we could come to these terms with the FTC in a cooperative spirit.

"Although we have different interpretations regarding Intel's market position and the legality of our past actions, the compromise provides a framework for resolving future intellectual property disputes with our customers," Barrett said.

Pitofsky also praised Intel for making the deal possible.

One of the high-profile disputes the commission examined was a lawsuit Intergraph brought against Intel.

Intergraph won a preliminary injunction against Intel, but that injunction has been appealed and both sides await the decision of an appellate panel.

In a statement, Intergraph said that the FTC settlement provides "an additional protection for Intergraph. Should the preliminary injunction in Intergraph's lawsuit happen to be lifted on appeal, Intergraph is still protected by this consent decree."

Intergraph earlierWednesday lauded the consent decree between the FTC and Intel, but said it will continue with its own antitrust case against the world's largest chip maker.

A Compaq spokesman said the company supports the settlement because it believes it "sufficiently addresses the interests of the industry and, more importantly, the consumer."

© Copyright 1999 Reuters

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