Some Say FTC Suit Wont Benefit Consumers

By Jeffrey Burt  |  Posted 2009-12-16 Print this article Print

It's also an indication of the Obama administration's decision to be more aggressive in prosecuting antitrust cases. For example, federal investigators reportedly are looking into IBM's mainframe business for antitrust violations. In addition, earlier this year, Christine Varney, head of the Department of Justice's antitrust division, pledged to target "monopolists" that use their position to hold down competition.

The FTC is accusing Intel of violating parts of the FTC Act instead of antitrust laws, and is pursing the claim internally rather than through the courts, Feinstein said. He expects the trial before an administrative judge to start in September 2010. If it loses there, Intel can appeal to the full commission and to the federal courts after that, he said.

The FTC move drew reactions from both sides, including organizations that say the lawsuit is antithetical to good business.

"No serious antitrust theory supports the FTC's action, which appears to take Intel to task for competing ferociously in a market that is ferociously competitive," said Ken Ferree, senior fellow at The Progress & Freedom Foundation, a Washington think tank. "If this ever ends up before a federal court, I'm sure the FTC's efforts will be exposed for what they are-an attempt to make headlines rather than good law."

The Competitive Enterprise Institute, another think tank, agreed.

"This lawsuit may succeed at grabbing headlines, but it won't benefit consumers one bit," said Ryan Radia, associate director of technology studies at CEI. "There is not one iota of evidence that Intel's maligned actions have actually harmed consumers or delayed processor innovation. In reality, computer chips have gotten faster, cheaper and more efficient every year for several decades. This baseless intervention in the marketplace will only delay further innovation in the microprocessor market."

However, Ed Black, president and CEO of the Computer & Communications Industry Association, applauded the FTC's actions. A vocal critic of the business practices employed by companies like Intel and IBM, Black said the result of the suit will be better protection for consumers and other vendors.

"The FTC indicates in its complaint that at least two companies, AMD and Nvidia, were out-competing some of Intel's offerings," Black said. "It appears Intel was falling behind and tried to trip up their competitors. If so, this is a good example of why competition laws and regulators willing to use them are critical to consumers and the nation's economy, which needs innovation."


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