Intel accused of monopoly practice

The U.S. Federal Trade Commission yesterday accused Intel Corp., the world's largest maker of computer chips, of illegally using its dominant market position for a decade to stifle competition and bolster its monopoly.

The complaint, to be heard by an FTC administrative law judge, says Intel tried to block "superior" products by rivals and hurt consumer choice. Intel has been "running roughshod" over principles of fair play, the FTC said.

"Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," Richard A. Feinstein, the FTC's director of competition, said in a statement. A hearing in the case may be held next September, the FTC said. The agency began probing Intel's business practices in June 2008.

Intel accounts for more than 80 percent of sales in the $32 billion market for computer chips, overshadowing No. 2 Advanced Micro Devices Inc. Intel has contended with antitrust probes for more than a decade, and it agreed to pay $1.25 billion to AMD last month to settle a four-year dispute. The chip-maker now faces another probe of its practices and possible steps to curb its dominance in microprocessors, the brains that power personal computers.

The action, setting the stage for the biggest U.S. antitrust case since the Clinton administration sued Microsoft Corp. in 1998, may reflect increased antitrust scrutiny of the technology industry under President Obama. Jonathan Leibowitz, a former chief lobbyist for the Motion Picture Association of America, was appointed chairman of the FTC by Obama in March.

Shares of Intel, based in Santa Clara, Calif., dropped 42 cents to close at $19.38 in Nasdaq Stock Market trading. The stock has gained more than 30 percent this year. AMD shares rose 3.74 percent in New York Stock Exchange composite trading, and shares of Nvidia Corp., an Intel rival in the graphics-chip market, added 8.05 percent on the Nasdaq.

Christine Varney, who heads the Justice Department's antitrust division, said in a speech in May that the Obama administration "will be aggressively pursuing cases where monopolists try to use their dominance in the marketplace to stifle competition and harm consumers."

The Justice Department shares antitrust enforcement responsibility with the FTC.

Intel said that it competed "fairly and lawfully" and that its actions had benefited consumers. The microprocessor industry is competitive, and prices have declined at a faster rate than in any other industry, the company said in a statement. In settlement talks with Intel, the government asked for "unprecedented remedies" that would make it "impossible for Intel to conduct business," general counsel Doug Melamed said.

"The FTC's rush to file this case will cost taxpayers tens of millions of dollars to litigate issues that the FTC has not fully investigated," Melamed said.