The Federal Trade Commission's Bureau of Competition enforces U.S. pro-competition laws in tandem — and at times in competition with — the Antitrust Division of the Department of Justice. Like its DOJ cousin, the Bureau seeks to curb anticompetitive conduct, such as price-fixing and rivalry-reducing mergers. And, more so than in the recent past, it has taken action to stem harm to consumers.
The latest foray put Intel Corporation under the Bureau's microscope. The result? A settlement that aims to prevent Intel for six years from misusing its dominance in the markets for computer chips — central processing units, graphics processing units, and chipsets.
According to the FTC's press release:
Under the settlement, Intel will be prohibited from:
- conditioning benefits to computer makers in exchange for their promise to buy chips from Intel exclusively or to refuse to buy chips from others; and
- retaliating against computer makers if they do business with non-Intel suppliers by withholding benefits from them.
In addition, the FTC settlement order will require Intel to:
- modify its intellectual property agreements with AMD, Nvidia, and Via so that those companies have more freedom to consider mergers or joint ventures with other companies, without the threat of being sued by Intel for patent infringement;
- offer to extend Via’s x86 licensing agreement for five years beyond the current agreement, which expires in 2013;
- maintain a key interface, known as the PCI Express Bus, for at least six years in a way that will not limit the performance of graphics processing chips. These assurances will provide incentives to manufacturers of complementary, and potentially competitive, products to Intel’s CPUs to continue to innovate; and
- disclose to software developers that Intel computer compilers discriminate between Intel chips and non-Intel chips, and that they may not register all the features of non-Intel chips. Intel also will have to reimburse all software vendors who want to recompile their software using a non-Intel compiler.
The announcement follows by a few days a key victory for Intel in a private antitrust case, In re Intel Corporation Microprocessor Antitrust Litig., No. 05-1717 (D. Del. July 28, 2010). A special master in the case recommended that the district court deny a motion to certify a nationwide class of Intel microprocessor buyers who purchased from a middle-man.
That doesn't get Intel home free, of course — not least because direct purchasers (your Dells, HPs, Sonys, Samsungs, and other PC-makers) may proceed on their own, as may large individual indirect buyers whose claims justify the costs. Not to mention rival chip-maker Nvidia, among others (but not AMD, which settled with Intel in 2009).
The FTC noted that its statutory authority, under section 5 of the FTC Act, "is broader than the antitrust laws and prohibits unfair methods of competition and deceptive acts and practices in commerce. Unlike an antitrust violation, a violation of Section 5 cannot be used to establish liability for plaintiffs to seek triple damages in private litigation against the same defendant." But, unlike the Antitrust Division, the Bureau cannot impose fines.
The American Antitrust Institute praised the pact as "the most important antitrust enforcement victory achieved so far during the Obama Administration".