U.S. regulators seen pursuing Intel even after AMD

* Experts don't see FTC backing down even after AMD deal

* Intel-AMD deal allows practices that FTC opposes -expert

* FTC says reviewing settlement

* Intel expected to be eager to settle - expert

By Diane Bartz

WASHINGTON, Nov 12 (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.

Regulators in Asia, Europe and the United States have taken action against Intel because of its system of offering discounts and other incentives.

Last week, New York Attorney General Andrew Cuomo accused Intel of threatening computer makers and paying billions in kickbacks to maintain its market dominance.

For its part, Intel Chief Executive Paul Otellini denied the company had done anything illegal and said Intel would meet the FTC to explain the settlement.

"We strongly disagree with the New York attorney general's case and believe the complaint is entirely without merit. Discounting and rebates are standard business practices and perfectly legal," he said.

European Commission spokesman Jonathan Todd said the EC has taken note of the Intel-AMD deal and will "vigorously monitor" Intel's compliance with a May 2009 ruling in which the commission fined Intel $1.2 million.

In 1999, the FTC and Intel settled charges that the chip maker used its market power to defend its dominance of the microprocessor market.

Japan's trade commission concluded in 2005 that Intel violated the country's anti-monopoly act. In June 2008, South Korea fined Intel some $26 million, finding it offered rebates to PC makers in return for not buying AMD microprocessors.

Intel shares fell 0.8 percent to $19.68 on Nasdaq. (Reporting by David Lawsky and Diane Bartz, editing by Tiffany Wu and Andre Grenon)