Intel Gets A Visit From The FTC Proctologist

If you've been wondering if Intel's 80+ percent market share of the microprocessor market amounted to a monopoly worth investigating, wonder no more. The Federal Trade Commision has started a formal review of Intel's business practices to see if they run afoul of any anti-competitive laws. They're sending out subpoenas to AMD and some of the many computer manufacturers that use Intel's chips in their units as well.

A.M.D. has waged a global legal and public relations campaign against Intel hoping to persuade American and foreign regulators that Intel’s pricing practices violate antitrust laws.

The fight between the two — over a market that generates revenue of more than $225 billion a year — is among the largest antitrust matters pending before American and foreign regulators, and is considered to be among the most important since the antitrust cases brought against Microsoft in the 1990s.

Though Intel and A.M.D. are based in California — and their largest customers are American computer and equipment makers — A.M.D.’s complaints have received considerably more traction abroad.

This week, the Korean Fair Trade Commission said it would order Intel to pay more than $25 million for violating its fair trade laws. The Korean commission found that Intel violated antitrust law when it offered $37 million in rebates to the personal computer makers, Samsung Electronics and the Trigem Company, from 2002 to 2005 in return for a pledge not to buy microprocessors from A.M.D. Intel responded by saying it was disappointed with the decision and would probably appeal.

Anti-trust prosecutions abroad are much easier to initiate and to end up with penalties assessed because unlike the US, many foreign governments actively use the laws to prop up any competitors of companies that gain monopoly-type market share. In the US, a company that gains overwhelming market share just has to avoid the appearance of  trying to bar entry to the marketplace of any competition. Rebates are in a gray area of anti-competitive practice, but can be considered anti-competitive if structured improperly. The largest corporation in the world a century ago, Standard Oil, was broken up mostly over rebate deals they entered into with the railroads to crowd out competition.

Tags:  Intel, CTO, FTC, rom, pro