FTC Expands Complaints Against Intel to GPU Market

As others have done in lawsuits against Intel, the FTC is claiming that anticompetitive behavior on the part of Intel over the past decade has unfairly limited the market for rival AMD's processors. However, the FTC also is saying those actions are now extending to Nvidia in the graphics chip market. Intel executives argue that the company is competing fiercely but fairly, and that conditions the FTC wants to impose would hurt Intel's ability to compete and innovate.

The Federal Trade Commission's lawsuit against Intel has a familiar ring to it, echoing many of the charges of anticompetitive behavior that can be found in similar complaints filed by European regulators, U.S. investigators and rivals of the chip making giant.

However, there are key elements that separate the FTC's Dec. 16 filing from those other ones, such as expanding the focus beyond Intel's behavior in the computer processor market to include the company's business practices in the increasingly important graphics chip space.

Also, the FTC is not looking for monetary damages from Intel. Instead, it has outlined a number of desired changes to Intel's business practices-ranging from pricing to bundling of products to interoperability-that regulators say are needed to ensure fair competition, but which Intel executives say will hurt the company's own ability to compete.

Those key differences helped fuel the FTC's decision to go ahead with the lawsuit despite Intel's $1.25 billion settlement with CPU rival Advanced Micro Devices in November, and led to settlement negotiations between the FTC and Intel breaking off.

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In a conference call with reporters, Richard Feinstein, director of the FTC's Bureau of Competition, said such steps are necessary to protect the market and consumers from what he called Intel's exclusionary and damaging behavior that he said has been going on for more than a decade, whenever Intel feels threatened.

However, Doug Melamed, senior vice president and general counsel for Intel, called the FTC suit misguided, saying Intel has competed aggressively but fairly and the conditions the agency wants to put on Intel would limit the chip maker's ability to innovate and compete. Those conditions include making Intel unable to offer volume discounts and bundle products, and forcing Intel to license its intellectual property.

"We have been sued today for not agreeing to [conditions] that will be bad for Intel, bad for the market and bad for consumers," Melamed said during a conference call with reporters.

The FTC lawsuit was just the latest legal action to be taken against Intel by a governmental agency. Intel already is appealing a $1.45 billion fine levied by the European Commission earlier in 2009 involving antitrust issues in the CPU space, and the N.Y. Attorney General's Office is pursuing similar claims in that state.