WASHINGTON (Reuters) - U.S. antitrust regulators are moving toward filing a complaint against Intel Corp after the European Union fined the world’s biggest chipmaker $1.45 billion for engaging in anticompetitive practices, sources said.
Three of the four commissioners on the Federal Trade Commission, which opened a formal inquiry in June 2008, are in favor of filing a complaint against Intel, said the sources, who asked not to be named.
“They’re close,” one source said. “They said it could be a matter of weeks or a matter of months when the vote happens.”
FTC Chairman Jon Leibowitz and Commissioners Thomas Rosch and Pamela Jones Harbour are in favor of filing a complaint, the sources said.
Intel, whose microprocessors power more than 80 percent of the world’s PCs, believes “that our business practices are lawful and ... (work) to the benefit to consumers,” Intel spokesman Chuck Mulloy said on Friday.
“We certainly have been working closely with the FTC as they conduct their investigation. We would hope that the speculation is incorrect as we are continuing to work with the commission,” said Mulloy.
Europe, South Korean and Japanese authorities have already moved against Intel for antitrust violations.
The European Union fined Intel 1.06 billion euros ($1.45 billion) for practices like paying computer makers to postpone or cancel plans to launch products that used chips from rival Advanced Micro Devices; providing illegal, secret rebates so computer manufacturers would use mostly or entirely Intel chips; and paying a major retailer to stock only computers with its chips.
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.
In 1999, the FTC and Intel settled charges that the chip maker used its market power to defend its dominance of the microprocessor market.
The much smaller AMD has long accused Intel of abusing its dominance of the $280 billion chip market and filed its own lawsuit in 2005, but that case has not yet gone to trial.
Normally in antitrust cases, the FTC would simply require that anti-competitive conduct be stopped, but it can demand money in the rare cases of egregious conduct, said David Balto, a former FTC policy director.
The FTC is looking into Intel’s microprocessor business along with its chip set business, the sources said.
“It’s not just CPUs,” one of the sources said, referring to chips used in a computer’s central processing unit.
Earlier this month, Nvidia said in a statement that it would stop investment in chipsets for use alongside Intel’s new generation of microprocessors.
“Because of Intel’s improper claims to customers and the market that we aren’t licensed to the new DMI bus (a technology that connects components) and its (Intel‘s) unfair business tactics, it is effectively impossible for us to market chip sets for future CPUs,” the company said in the statement.
In May, Nvidia’s Chief Executive Jen-Hsun Huang took issue with Intel’s practice of bundling chips together. He said Intel sells its Atom microprocessor by itself for $45, but it will sell Atom for $25 if it is purchased in combination with other Intel chips that compete with Nvidia products.
David Kanter, an analyst with Real World Technologies, said, “Intel’s sales guys are incredibly aggressive and don’t hesitate to step right up to the line.”
“At the end of the day, this case seems like it would get settled,” Kanter said. “There is a possibility that if Intel settles with AMD, it would defang the government cases.”
Intel’s shares closed down 1.7 percent at $19.78 on Friday.
Reporting by Diane Bartz in Washington; Additional reporting by Ian Sherr in San Francisco