Although legal experts say there is a high probability the Federal Trade Commission's four commissioners will approve the proposed settlement, it still faces opposition from third parties, such as Intel competitors.
Announced Monday, just one day before trial was to start in FTC administrative court, the agreement would resolve charges that Intel illegally coerced three customers into signing over valuable intellectual property rights.
The proposed settlement, which remains confidential, is expected to come up for a tentative vote by commissioners sometime next week. Assuming they approve it--considered almost a given by several legal observers--the proposed settlement will be published and given a 60-day comment period.
But the deal could face opposition from any number of parties who may argue that it does not go far enough or that it will harm antitrust enforcement in the future. Possible opponents include Intergraph, which is pursuing a private antitrust lawsuit against Intel, or other legal foes such as Advanced Micro Devices. A few weeks after the comment period closes, commissioners will formally accept or reject the deal.
"We're waiting to see it when it comes out," said William Jaeger, a Townsend and Townsend and Crew lawyer representing Intergraph. "I suspect we're not going to be the only ones looking at the relief that the FTC got."
Specific terms of the settlement remain unknown. The FTC, which last June sought an order preventing Intel from cutting off advanced product information from customers who assert intellectual property rights, said it got what it wanted out of the settlement. Intel, meanwhile, says the deal preserves the company's bedrock principal that Intel receive fair value for its intellectual property.
If the settlement shows the FTC gave ground to Intel, however, competitors may cry foul.
Opposition to proposed government settlements has proved problematic in the past. In late 1994, Microsoft foe Gary Reback, an attorney at Wilson Sonsini Goodrich & Rosati, challenged an agreement between the Justice Department and Microsoft. A few months later, U.S. District Judge Stanley Sporkin rejected the deal, saying it did not go far enough to rein in the software company. Although Sporkin's decision was later overturned on appeal, the episode clearly demonstrated the clout third parties can have.
Still, legal experts remain optimistic that opposition to the deal--should it emerge--is not likely to scuttle the commission's deal with Intel.
"Comments as a practical matter are not going to persuade the FTC to back to trial," said Eliot Disner, a former lawyer in the FTC's bureau of competition, now in private practice at Ervin, Cohen & Jessup. At most, he predicted, "the comments might have the FTC negotiate some further detail" with Intel.
William Kovacic, an antitrust specialist at George Washington University, agreed, saying FTC settlements are more insulated from dissent than are those brokered by the Justice Department. Under federal law, Justice Department deals receive oversight from a federal judge. There is no such requirement for FTC settlements.
"It is much harder to persuade the body that initially approved the order to convince them [the settlement] was ill conceived," Kovacic said. He added that the settlement could be published within the next two weeks and receive final approval by July 4.