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FTC ready to vote on Intel

The Federal Trade Commission is expected meet on Monday to vote on whether to take action against Intel.

The Federal Trade Commission is expected to meet on Monday to vote on whether to take action against Intel.

Sources close to the case expect that the commission's four members--a fifth slot is empty--will vote at a midday meeting Monday to charge that Intel abused market power by forcing other companies to surrender their trade secrets.

As reported earlier, William J. Baer, the director of the FTC's bureau of competition, delivered his assessment of the nine-month investigation into the chipmaker's business practices to the agency's board of commissioners earlier this week. Sources close to the investigation said that Baer, along with his investigative staff, recommended that the commissioners file an action against Intel.

Under FTC procedure, the commissioners' vote on whether to take action on a recommendation occurs after reviewing the report and speaking to the companies under investigation. Typically, agency officials follow the recommendation of the bureau director.

While regulators appear set to file an action against the company, legal scholars have said that the agency may have a tough time proving its case because of the circumstances involved. (See related story)

The FTC is looking into whether Intel has used its dominant position in microprocessors to control various aspects of the high-tech industry. (Intel is an investor in CNET: The Computer Network.)

One of the main issues in the case now under discussion is whether Intel withdrew necessary technical information from workstation vendor Intergraph as a way to get Intergraph to sign over valuable patent technology. Intel allegedly wanted access to the patents because Intergraph was threatening to file lawsuits against other workstation vendors. The matter also is the subject of a lawsuit filed by Intergraph in the U.S. District Court of Alabama.

In addition, the FTC is said to be considering filing a second, broader suit against Intel that would focus on how Intel's overall product strategy could have anticompetitive effects in the market. Intel is planning on coming out with more integrated products--such as chipsets that include much of the functionality of graphics processors--that likely will have a strong effect on competition in the graphics arena.

Another avenue of inquiry is whether Intel's general disinclination to license its own technology has created anticompetitive effects.

Both the FTC and Intel, which makes the microprocessors that run four out of five personal computers, declined comment. (Intel is an investor in CNET: The Computer Network.)

In preparing its case, the FTC staff has looked at the company's relationship with Digital Equipment, Compaq Computer, Acer Computer, and Packard Bell, according to industry sources--in addition to the much-publicized relationship with Intergraph.

The commission said earlier this year that Intel holds monopoly power. This in itself would not be against the law unless, as the FTC is expected to contend, Intel abused its market power.

The investigation would continue if a case is filed, as the FTC would try to expand the charges, according to sources within and outside the government.

Intel has argued it has a right to stop giving advance proprietary information to customers on its latest products if they refuse to share their intellectual property in return.

But Intel was unable to convince a federal judge in Alabama, who granted computer maker Intergraph a preliminary injunction against Intel in April. The judge ruled Intel must give Intergraph information and enabling technology on the same basis it shared with others. Intel has appealed that ruling.

Sen. Slade Gorton has written to FTC chairman Robert Pitofsky to express dismay the commission might act against Intel, which he called "an American success story."

"This is not the proper role for the federal government," the Washington Republican said, calling a possible suit "another example of the misguided policies of the Clinton administration."

Reuters contributed to this report.