August 11, 1999 5:45 PM PDT

FTC antitrust case against Intel formally ends

The Federal Trade Commission has given final approval to a consent order settling charges that Intel stifled innovation in the microchip industry.

The FTC's 3-1 vote last week formally resolves an antitrust action filed in June 1998 accusing Intel of illegally targeting three customers. Attorneys for Intel and the FTC first agreed to the consent order in early March, the day before the trial was to start.

Despite the settlement, the FTC is continuing a broad investigation probing virtually all of Intel's business practices, Intel spokesman Chuck Mulloy said.

"We are continuing to cooperate with all of their requests, and we're confident that when they complete their investigation they will conclude that we conduct our business in a fair and lawful manner," he said.

The FTC's complaint alleged that Intel acted as a monopolist when it illegally threatened to withhold crucial product information and samples from Intergraph, Compaq, and Digital Equipment (now owned by Compaq) after the companies independently refused to license their respective technology to the chip giant.

The tactics, the FTC claimed, put potential Intel rivals at a competitive disadvantage by eroding their intellectual property rights.

Intel maintained it was not a monopolist and that its actions against the three companies were necessary to preserve its own rights.

Under the agreement, Intel may not withhold product information from customers suing for patent infringement unless the suit seeks an injunction blocking the sale or manufacture of Intel chips. The agreement was designed to strike middle ground between the parties. Potential customers dependent on Intel may enforce their patent rights without worrying about losing access to crucial information.

The No. 1 chipmaker, on the other hand, need not worry that it is providing products to a company that is asking a court to terminate future Intel product plans.

The only commissioner to vote against the agreement was Orson Swindle, who said it and the entire antitrust action were based on faulty premises.

"I...remain unpersuaded that the conduct at issue in this case demonstrably threatened to harm the consuming public," Swindle wrote in public comments. "Whatever injury Intel might have visited on Digital, Intergraph, and Compaq, I cannot accept that it could appreciably affect--much less stem--the immense tide of invention and improvement that continuously drives this industry."

A majority opinion responded that they remained convinced that Intel's actions were an example of "a monopolist engaged in conduct, other than competition on the merits," that was capable of preserving its dominant position.

 

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