March 31, 2005 8:35 PM PST

Intel to abide by Japan FTC recommendations

Intel said Thursday it would agree to antitrust recommendations by the Japan Fair Trade Commission, which has called on Intel to halt the practice of requiring PC makers to limit the use of competitors' chips in exchange for monetary rebates.

Intel accepted the recommendations but noted that it disagrees with the findings of fact underlying the agency's allegations and with the application of law in the recommendations.

Intel's Japanese subsidiary, Intel K.K., received the recommendations earlier this month. They called for the company to cease and desist such actions as offering favorable prices to companies that agreed not to use, or to limit their use of other chipmakers' processors.

"Intel respectfully disagrees with the allegations contained in the recommendation, but in order to continue to focus on the needs of customers and consumers, and continue to provide them with the best products and service, we have decided to accept the recommendation," Bruce Sewell, Intel general counsel, said in a statement.

The company said it believed the agency's allegations misinterpreted important aspects of business practices and failed to take into account the competitive landscape that Intel and its customers compete in.

"They misrepresented some of our business practices. There was no damage to our customers due to discounting, and the consumers weren't taken into account at all (in the Japan FTC investigation)," said Chuck Mulloy, an Intel spokesman.

The formal cease-and-desist order is expected to take affect within a month to several months, said Hiroshi Yamada, director of the third investigation division of Japan's Fair Trade Commission. And should the Japan FTC determine the chip giant has violated its agreement, the company could be subject to criminal prosecution, he added.

"We issued the findings of fact and concluded Intel violated the monopoly act," Yamada said. "We believe the findings of fact are true, but Intel is not required to accept the findings of fact when they accept the recommendations."

The agency's warning was the second against a U.S.-based computer industry giant. It issued a similar warning against Microsoft last summer, which the the software giant appealed.

Intel said it still believes it will be able to provide competitive pricing within the limitations of the order. But whether the issue will affect its sales overall in Japan has yet to be seen.

"We'll have to see as time goes on," Mulloy said.

Advanced Micro Devices, an Intel competitor, declined to comment on whether its business in Japan will increase because of the agreement.

But Michael Simonoff, an AMD spokesman, said: "While it's a step forward that Intel is accepting the recommendations, it's bewildering that even when presented with the deliberate and systematic antitrust behavior, Intel refuses to admit the facts."

 

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