U.S. agency rejects making a formal antitrust inquiry into Intel practices.
WASHINGTON: The head of the U.S. Federal Trade Commission has rejected requests by lawmakers, other commissioners and a major rival company to undertake a formal antitrust investigation of Intel, the worlds largest maker of computer microprocessors, for anti-competitive conduct, government officials and lawyers involved in the proceeding said.
In recent weeks, regulators in South Korea and with the European Commission have separately accused Intel of antitrust violations by offering large discounts to computer makers in exchange for their not using products by a rival company, Advanced Micro Devices, which has struggled to compete and has waged a global antitrust campaign against Intel. Japanese officials made similar accusations in 2005.
The U.S. commission has been conducting an informal review of AMDs complaints for more than a year, gathering thousands of documents from Intel and its customers. But the agencys chairwoman, Deborah Majoras, has rejected requests to elevate the inquiry to a formal investigation, which would give staff members the authority to issue subpoenas and compel testimony from executives of the companies involved.
The action by the regulators outside America and the debate at the U.S. agency is part of a fierce and protracted legal, political and public relations battle between Intel and AMD over the global market for microprocessors.
The fight between the two - over an industry that generates annual revenue of more than $225 billion - is among the largest antitrust matters pending before American and foreign regulators. Besides lobbying regulators around the world, AMD has sued Intel in a U.S. District Court in Delaware. A trial is scheduled to begin in the spring of 2009.
While the two companies are based in California - and their largest customers are American computer and equipment makers - AMDs complaints have received considerably more traction abroad. Intel executives said that, to the extent there has been a different approach to AMD complaints by foreign and American regulators, it is because the American view is that antitrust is supposed to protect competition, while the European and Asian approach is to protect market competitors.
AMD and its allies dispute that, maintaining that Intels pricing policies in the United States and abroad are designed to maintain a near monopoly on the chip market and violate the U.S. Sherman Antitrust Act. Intel, which was founded by engineers who both developed the chip and made repeated innovations that made it both smaller and more powerful, controls 80 percent to 90 percent of the microprocessor market. American antitrust law permits a company to hold a monopoly, but it forbids a company from leveraging its dominance to restrict competition.
AMD has asserted that Intel offers rebates and discounts that, in effect, result in its chips being sold at below the cost of production, a practice that some courts have said can be a violation of antitrust law. Intel acknowledges that it offers discounts and rebates but denies that they are below cost or at predatory levels.
Federal Trade Commission officials said that at least two of the five commissioners had recommended that the case was significant enough that the chairwoman should open a formal investigation. But Majoras has declined without elaboration to do so, the officials said.
Though officials said they did not know why Majoras had not moved forward with a formal inquiry, they offered several possible explanations.
They said she might be skeptical of the antitrust theory underlying the case or that she might want to await the outcome of a different case brought by the commission that involves an interpretation of the same section of the Sherman Antitrust Act.
They also said she might be concerned that there was little that American regulators could add to the proceedings already undertaken by the foreign authorities.
Chuck Malloy, a spokesman at Intel, said that the company has been closely cooperating with the commission staff and provided it with a significant amount of information from the foreign inquiries and the lawsuit.
AMD does not have the ability to make all microprocessors for any of the largest computer makers and has said in court papers that since those makers must rely in part on Intel products, Intel is able to threaten to cut off supply or offer substantial discounts in return for commitments not to do business with AMD. Among the accusations AMD has made are that some computer makers that do business with AMD have been punished by Intel.
Three months ago, the Europeans issued a statement of objections, or official charge sheet, against Intel, saying the company had engaged in anticompetitive conduct. In 2005, Japanese regulators ruled that Intel had violated its antitrust law. Intel agreed to abide by the ruling but said it disagreed with its findings and antitrust analysis. And last month, the South Korean authorities said that they had sent a statement of objections to Intel based on their preliminary conclusion that Intel abused its market power in South Korea.
