* Deal applies to CPUs, GPUs, chipsets
* Company says changes will not be material
* Intel denies any wrongdoing
* Nvidia shares rise 4.3 pct, Intel shares flat
(Adds analyst comments, link to FACTBOX)
By Alex Dobuzinskis and John Poirier
LOS ANGELES/WASHINGTON, Aug 4 Intel Corp
(INTC.O) has agreed to stop using threats and unfair discounts
to block its rivals, resolving a costly, high-profile legal
battle over accusations it illegally smothered competition for
over a decade.
The world's largest chip maker -- which managed to settle
the U.S. Federal Trade Commission complaint without paying a
cent -- also pledged to grant rivals access to its leading
processor technology for six years. [ID:nN04267572]
Shares in graphics chip maker Nvidia Corp (NVDA.O), which
along with Intel arch-foe Advanced Micro Devices Inc AMD.N
first brought the complaint to the top U.S. trade body, jumped
4.25 percent. Nvidia has sued Intel for anti-competitive
practices in a still-pending trial.
"Intel has got to be happy that they were able to minimize
the damage and get it over with," said Patrick Wang, an analyst
with Wedbush Securities.
The settlement had been expected. Shares of Intel closed
barely changed at $20.73 on Nasdaq.
Urged on by AMD and Nvidia, the FTC accused Intel in
December of using its market dominance to unfairly stifle
competition. Intel makes 80 percent of the world's
The deal bars Intel from retaliating against computer
makers if they do business with non-Intel suppliers. It also
agreed to give makers of complementary products such as
graphics chips access to its central processing units for the
next six years.
"It's a landmark settlement that really will have a
striking effect on improving competition in the market," said
David Balto, a former FTC policy director.
Raymond James analyst Hans Mosesmann said Nvidia "can point
to" the FTC settlement when it goes to trial against Intel.
"What is interesting is that a governing body in the U.S.
has joined other countries (Korea, Japan, and the European
Union, for example) in pinning Intel as the bully," he said in
a client note.
"The message is that Intel should be more constrained in
its dealings with OEMs (original equipment manufacturers), ODMs
(original design manufacturers), the channel, and its
competitors. We are watching you."
NO EXCLUSIVE DEALS
Intel has been under attack from rivals for years over its
aggressive pricing and sales tactics in marketing the chips
that essentially make up the "brains" of personal computers.
In 1999, the FTC settled a complaint against Intel,
accusing it of cutting off access to its technology for three
customers -- Digital Equipment Corp, Intergraph Corp and Compaq
Corp. Two of the three companies are now defunct.
It has run afoul of regulators elsewhere. The European
Commission has fined Intel 1.06 billion euros ($1.4 billion)
for shutting out AMD, a decision Intel is appealing. Regulators
in South Korea and Japan have also taken action against Intel.
Intel, which has denied any wrongdoing, said on Wednesday
the agreed-upon changes in its business practices would not
have a material impact on its financial results.
"The settlement enables us to put an end to the expense and
distraction of the FTC litigation." Doug Melamed, an Intel
senior vice president, said in a statement.
The company is now barred from offering deals to computer
makers in exchange for their promise to buy exclusively from
Intel. It is also required to change its intellectual property
deals with AMD, Nvidia and chip maker Via.
Officials said they halted a deceptive practice involving
"compilers," a software tool to help write code so software can
communicate with a computer's microprocessor. FTC Chairman Jon
Leibowitz said Intel configured its compiler so software ran
more slowly on processors made by AMD and others.
"Intel surreptitiously made it look as though that
slow-down was AMD's fault," he said.
AMD stock held steady on Wednesday, ending 1 cent higher at
$7.52 on the New York Stock Exchange.
Wang said AMD's delayed release for its new Llano
processors underscored its competitive disadvantage, regardless
of the FTC action.
"Just because you have a referee there making things equal,
doesn't mean AMD is going to win this basketball game. It's
extremely important they execute," Wang said.
Ed Snyder, managing director of Charter Equity Research,
agreed Intel will emerge largely unscathed.
"It's not going to have any impact on their microprocessor
business because they're so far ahead of their only other real
competitor, which is AMD," he said. "What it would affect is
some of their graphics processors and other things that they
bundle with the microprocessors."
Officials at AMD and Nvidia praised the deal. AMD settled
its own dispute against Intel for $1.25 billion in November.
AMD's critical remaining concern was Intel's use of
all-or-nothing discounts to deny competitors access to the
marketplace. The FTC's order clearly and firmly prohibits such
abuse," AMD said in a statement.
A suit is still pending between Nvidia and Intel.
"We look forward to Intel's actions being examined further
by the Delaware courts later this year," Nvidia spokesman
Hector Marinez said.
$1 = 0.7597 euro
(Additional reporting by Kim Dixon in Washington, Editing by
Edwin Chan and Richard Chang)