June 6, 2008 / 4:17 PM / 12 years ago

FTC launches antitrust probe of Intel

WASHINGTON/SAN FRANCISCO (Reuters) - The world’s leading semiconductor maker Intel Corp faces a formal investigation by the U.S. Federal Trade Commission after fighting similar antitrust probes in Europe and Asia, the company said on Friday.

An Intel employee in an undated photo. The U.S. Federal Trade Commission has opened a formal antitrust investigation of semiconductor maker Intel Corp <INTC.O> for anti-competitive conduct, Intel and the FTC said on Thursday. REUTERS/File

Smaller rival Advanced Micro Devices Inc has long accused Intel of abusing its dominance of the $280 billion chip market; it filed suit against Intel in 2005. Intel’s microprocessors — the electronic brains of personal computers — power more than 80 percent of the world’s PCs.

The FTC had been unwilling to go beyond an informal investigation of Intel under its former chairman, Deborah Platt Majoras. She left the agency two months ago and was replaced by another Republican, William Kovacic.

An FTC spokeswoman confirmed that the case has been upgraded to a formal probe but declined to detail the agency’s concerns about Intel.

Intel General Counsel Bruce Sewell said the company already has given the FTC hundreds of thousands of documents in the agency’s two-year-old informal probe and will continue to cooperate.

“We don’t believe that there’s been abusive behavior or illegal behavior,” he told Reuters in a telephone interview. “The record here is so strong in our favor.”

The FTC investigation is a second blow this week for Intel, stock of which was down 76 cents or 3.2 percent at $23.11 in afternoon trading on the Nasdaq. On Thursday, the Korea Fair Trade Commission in Seoul ruled that Intel had abused its dominant position in the local market and imposed a fine of $25.6 million. Intel said it would almost certainly appeal.

One analyst said neither consumers nor personal computer makers were harmed by Intel’s dominance in the chip market.

“Pricing is as competitive as it’s ever been,” said Ashok Kumar of CRT Capital Group. “For the (U.S.) government to put their fingers in this, I don’t know who that really serves.”

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The company also faces other investigations.

The New York state attorney general opened a formal probe of Intel in January to determine whether it broke state antitrust laws by trying to squeeze out AMD. And one year ago, the European Commission in Brussels charged Intel with selling chips below cost and offering customers huge rebates in an illegal attempt to drive AMD out of the market.

Japan’s trade commission concluded in 2005 that Intel had violated that country’s anti-monopoly act. Intel said it disagreed with the findings but accepted the commission’s recommendation, a move that allowed it to avoid a trial.

In a previous FTC investigation of Intel, the two reached a settlement in 1999.

In addition to the various government investigations, AMD’s lawsuit accuses Intel of giving computer makers illegal discounts and retaliating against manufacturers who used AMD chips, or stores that gave significant shelf space to computers with AMD chips. On Thursday, the court in Delaware hearing the case postponed a trial until 2010.

AMD confirmed that it was subpoenaed as part of the FTC probe.

“In every country around the world where Intel’s business practices have been investigated, including the decision by South Korea this week, antitrust regulators have taken action,” said AMD Executive Vice President Tom McCoy in a statement.

CRT’s Kumar downplayed the impact of the FTC investigation and the South Korean ruling earlier in the week.

“I think the recent fine against Intel from South Korean regulators is more of a slap on the wrist,” he said. “In the broader scheme of things, I think this is irrelevant.”

Editing by Andre Grenon and Gerald E. McCormick

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