U.S. regulators seen pursuing Intel even after AMD

By Diane Bartz

WASHINGTON (Reuters) - The U.S. government is expected to plow ahead with its antitrust case against Intel Corp (INTC.O) even after losing critical support from the chip maker's main rival Advanced Micro Devices Inc (AMD.N).

AMD and Intel announced on Thursday that they have settled more than a decade of legal wrangling, with Intel agreeing to pay its smaller rival $1.25 billion and AMD withdrawing all regulatory complaints against the world's largest chipmaker.

The deal requires Intel to end some practices, including making discounts conditional on customers buying exclusively Intel microprocessors, said Richard Brosnick, an antitrust expert with Butzel Long.

But it allows Intel to continue other practices that the U.S. Federal Trade Commission frowns on, such as giving retroactive volume-based discounts, he said.

"I'd be surprised if they (FTC) just went away because this does not cover a lot of things that they have said that they're concerned about," said Brosnick.

The FTC had a relatively business-friendly approach during the eight years of the Bush administration, but has taken a tougher stance under Democratic Chairman Jon Leibowitz.

It is investigating Intel after allegations by AMD that the larger company had abused its dominance of the $280 billion chip market. Intel makes 80 percent of the world's central processing units, the brains of personal computers.

"I'm sure the FTC would rather have AMD in there giving data," said a high-tech antitrust insider, who asked not to be identified because of the sensitivity of his position.

But despite AMD's surprise settlement, which drove its shares up 22 percent on Thursday, antitrust experts expect the FTC to continue with its probe.

"If they (the FTC) were going to file a lawsuit, they're going to file a lawsuit. It will have no impact," said antitrust expert John Briggs of Axinn Veltrop Harkrider LLP.

"If they do bring a lawsuit, it's very settle-able. I think Intel wants to put this all behind them."

Leibowitz said the agency was looking at the AMD settlement, but declined to give more details.

"The FTC has an ongoing independent investigation of Intel's practices so we cannot comment further at this time," he said in an email statement.

Bert Foer, head of the American Antitrust Institute, also said it was unlikely the FTC would shift gears because of the AMD deal.

"There's no reason to back down because of the settlement," he said, pointing to a variety of other critics of Intel's business practices.