Intel likely to face new federal anticompetition charges

Analysts say the FTC's case will try to stop new anticompetitive behavior by Intel, which several governments are suing for alleged past misbehavior

With New York's attorney general filing antitrust charges against Intel this week, industry watchers say the Federal Trade Commission will join the fray against the chip maker, maybe even before the end of the year. Andrew Cuomo leveled New York's suit against Intel on Wednesday, it was just one more log on the legal pile for Intel, which has been dealing with related legal issues in the U.S., Europe, Japan, and South Korea.

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This latest suit piggybacks on a lawsuit filed by Intel's biggest rival, AMD, in U.S. District Court in 2005, and expected to go to trial this coming spring.

But industry analysts say if the FTC launches its own legal attack against Intel, it will be a whole new ball game for the chip company. "It wouldn't surprise me to see the FTC jump into the fight with an antitrust action of their own against Intel, if only so that they don't look like they're being lazy in the face of actions from the European Union and now New York," said Dan Olds, principal analyst with The Gabriel Consulting Group.

"If this happens, it could result in a very long, drawn out legal battle that could make WWI trench warfare seem quick and efficient by comparison," he said.

Rumors started circulating on Wednesday that Cuomo's office had been in talks with the FTC before it filed its own charges this week.

John Balto, a former policy director at the FTC and currently a senior fellow at the Center for American Progress, told Computerworld that the FTC has been working long and hard on a case against Intel. He contends it will probably will seek an injunction against the company, and that there's a good chance it would come in the next few months.

"I know the FTC is devoting a tremendous amount of time and effort to this,"Balto said. "I think we can look forward to the FTC filing an action that would be much more significant than those brought by AMD and the New York attorney general."

And while the New York case is based on similar allegations and evidence to the suit filed by AMD in 2005, Balto said the FTC is looking at a different case -- a more current one.

"The New York case is a case about the past," Balto said. "The FTC case will be a case about the future. It will be focusing on dynamic competition, the impact on innovation, on how Intel's conduct ... is going to harm competition and consumers in the future, stifling the ability of new rivals to emerge ...," he said. "It will take Intel's case from a whole different perspective and bring a whole new dimension of concerns," Balto said.

Rob Enderle, an analyst with the Enderle Group, said he thinks Cuomo timed the New York suit so it would precede the FTC's own action. "I doubt [New York] would do this if they weren't pretty certain the FTC was going to act relatively soon," added Enderle. "My guess is they are just trying to grab the spotlight before the FTC, which has more money, gets it.

Hillard Sterling, an antitrust attorney at law firm Freeborn & Peters LLP, also sees New York's lawsuit as a signal that the federal government will be taking action soon. He said that if the government gets involved, other defendants may be quick to jump on the bandwagon and try to take advantage of an Intel under siege.

Olds and Enderle said that with Intel already facing so many legal issues, rival AMD has an opportunity to take advantage of the drag that's creating on the company.

However, they agree that if the FTC jumps in, Intel will have to spend even more of its time and attention on its legal front, opening the door even wider for AMD and other competitors.

"IBM was hit by a federal antitrust suit in 1969 that was finally dismissed in 1981, after costing both parties uncounted millions of dollars and lawyer man hours," Olds said. "If the FTC jumps into the fray against Intel, it will ratchet up the stakes of the game and force Intel to defend themselves on yet another front."

Computerworld's Pat Thibodeau contributed to this report.

This story, "Intel likely to face new federal anticompetition charges" was originally published by Computerworld .

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