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U.S. charges Intel with illegally crippling its rivals

December 17, 2009 at 5:26AM
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SAN FRANCISCO - The Federal Trade Commission piled on new antitrust charges against Intel Corp. Wednesday, seeking to end what it described as a decade of illegal sales tactics that have crippled rivals and kept prices for computer chips artificially high.

The FTC's suit contains the most wide-ranging allegations yet against the world's largest chipmaker, which is also fighting a record $1.45 billion antitrust fine in Europe and separate cases in South Korea and New York state.

The FTC action comes despite Intel having recently settled similar complaints brought by rival Advanced Micro Devices Inc. (AMD), whose lobbying of regulators led to their charges. In a 2005 lawsuit, AMD quoted a manager from Toshiba Corp. comparing Intel's payments for not using AMD's chips to "cocaine" and an executive from Gateway complaining that Intel's threats of retaliation for working with AMD had beaten them "into guacamole."

If the FTC prevails, the case could have a broad impact because it concerns two key markets that are dominated by Intel, instead of just one in the other cases.

The FTC is raising new charges of manipulation in the market for graphics processing units, or GPUs, which primarily handle video and other images. Until now, Intel has faced allegations only regarding central processing units, or CPUs, which are the "brains" of personal computers.

Intel has about 80 percent of the global CPU market, with AMD commanding virtually the rest. Intel also has more than half of the graphics chip market.

The FTC alleges that Intel strong-armed computermakers into exclusive deals, manipulated technical data to make its chips look more powerful than those from competitors and blocked rivals from making its chips work with Intel's. As a result, rivals have been hobbled and prices haven't fallen as much as they could have, the FTC said.

"Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," said Richard Feinstein, director of the FTC's Bureau of Competition. "It's been running roughshod over the principles of fair play and the laws protecting competition."

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The new charges against Intel come as another antitrust target, Microsoft Corp., resolved a major issue of its own in Europe. Microsoft agreed to offer users of its Windows operating system a choice of Web browsers from other companies in exchange for the European Commission dropping charges against Microsoft over the tying of Internet Explorer to Windows.

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about the writer

JORDAN ROBERTSON, A ssociated Press

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