U.S. files suit against Intel alleging antitrust violations FTC says chip maker illegally kept data from three customers

Computers

June 09, 1998|By COX NEWS SERVICE

WASHINGTON -- Intel Corp., the world's largest maker of computer chips, became the latest target of government trust-busters yesterday when the Federal Trade Commission voted to charge the company with illegally failing to share key data with its customers.

William Baer, director of the FTC's Bureau of Competition, accused Intel of using its paramount position in the chip market as a "club" against three computer makers after relations with the firms had soured in separate licensing, patent and royalty disputes.

The quarrels caused Intel to unfairly deny these customers access to its coveted "how-to manual," the FTC said. In doing so, Intel has "cut off customers and competitors in order to impede innovation and stifle competition," Baer said at a news conference after the commissioners voted 3-1 to act.

In Santa Clara, Calif., the $25 billion microprocessor firm said the FTC action is based on a mistaken interpretation of the law and the facts. It vowed to fight the charges.

"For more than 10 years, Intel has taken unprecedented steps to ensure that all of our activities and policies are in full compliance with existing law," Intel said in a statement. "The commission's decision today signals that they want to change the very laws upon which we've based our policies."

Several legal experts noted that if the government prevails in the Intel case, a dominant firm would be forced for the first time to share its intellectual property with its customers -- even after a falling out.

The FTC move follows a landmark Justice Department antitrust suit against Microsoft Corp., which holds a virtual monopoly on the Windows software that drives Intel chips.

The scope of the two cases and their future legal tracks differ. The anti-competitive charges against Microsoft will be tried before a federal judge in early September. Intel must respond to the regulatory agency's complaint before an FTC administrative law judge.

Intel, by freezing out Digital Equipment Corp., Intergraph Corp. and Compaq Computer Corp. from advance information, "repeatedly used its monopoly power as a club" against them, according to the 11-page complaint.

The case grew out of the chip giant's denial of samples of new microprocessors to Intergraph in advance of their general availability. Intel did so in retaliation for a patent infringement lawsuit that Intergraph -- the developer of a rival chip to Intel's Pentium, called the Clipper -- had brought against Intel.

The suit sought an injunction to halt Intel's microprocessor sales, which control 90 percent of the market. In April, a federal judge in Alabama ruled in Intergraph's favor in the patent case, but did not issue an injunction.

The basic issue in the FTC suit is whether Intel can refuse to provide Intergraph and other firms with advance inside information. The FTC views those denials as violations of antitrust laws because Intel, as a monopolist, has an "affirmative duty" not to "harm competition."

Pub Date: 6/09/98

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