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Intel, FTC settle antitrust case

Chip giant agrees to settle out of court with the Federal Trade Commission over the agency's lawsuit that accused Intel of stifling the competition and maintaining its own monopoly.

Intel and the Federal Trade Commission have settled their antitrust case, the FTC announced Wednesday.

The FTC said that the settlement resolves the charges that Intel had illegally stifled competition in the computer chip market, while Intel has agreed to a new set of provisions designed to renew competition and keep the company from quashing its rivals.

Intel image

The settlement prohibits Intel from using threats, bundled prices, or other offers to exclude or hamper the competition in the sale of CPUs (central processing units), GPUs (graphic processing units), or chipsets. The settlement also prevents Intel from deceiving computer makers about the performance of non-Intel CPUs or GPUs.

The accord goes beyond any reached in prior antitrust cases against Intel, according to the FTC. The new agreement was set up to protect all of Intel's competition in the CPU, graphics, and chipset markets rather than any one single rival, said the agency. That point refers to the antitrust lawsuit filed against Intel by AMD, which cost Intel $1.25 billion to settle but affected only its actions toward AMD.

Intel indicated in late June that it was talking with the FTC about settling the antitrust claims. Reports that a settlement had been reached surfaced Tuesday, with an announcement that the FTC would spell out the details on Wednesday.

The FTC had sued Intel last December, accusing the chip giant of anticompetitive tactics designed to beat down the competition and build up its own monopoly. The agency had charged that Intel used a series of threats and rewards to convince PC makers such as Dell, Hewlett-Packard, and IBM to avoid buying chips from the competition.

The agency had charged Intel with violations of Section 5 of the FTC Act (PDF), a fairly broad set of laws that guard against unfair, anticompetitive, and deceptive acts in commerce.

The new settlement also focuses on Intel's disclosures concerning its compiler. The FTC had charged that the company modified its compiler to intentionally slow down the performance of rival chips so it could tell customers that its own chips performed better than those of the competition.

Manufacturers of products that work with Intel's chips, such as discrete GPUs, have also been granted access to Intel's CPU over the next six years, the FTC said.

Under the specific terms of the settlement, Intel is prohibited from offering rewards to PC makers in exchange for them promising to buy Intel chips exclusively or refusing to buy chips from the competition. The company is also banned from withholding benefits from PC makers who do business with non-Intel suppliers.

Intel will be required to revise its intellectual property agreements with AMD, Nvidia, and Via Technologies so those companies can feel free to evaluate mergers or joint ventures with other businesses without fear of being sued by Intel for patent infringement. Additionally, Intel will have to offer to extend its x86 licensing agreement with Via for five years beyond the current one, which ends in 2013.

The FTC also laid out a few requirements for Intel.

The company must maintain its PCI Express bus interface for at least six years in a way that won't limit the performance of GPUs made by rival companies. Intel must disclose to software developers that its compiler discriminates between Intel chips and non-Intel chips and may not take into account all features of non-Intel chips. Intel also has to reimburse all software vendors who want to recompile their software using a non-Intel compiler.

While the settlement goes beyond the terms and restrictions applied to Intel in previous suits, the FTC said it believes the pact will still leave the company room to continue to innovate and compete.

"This case demonstrates that the FTC is willing to challenge anticompetitive conduct by even the most powerful companies in the fastest-moving industries," Chairman Jon Leibowitz said in a statement. "By accepting this settlement, we open the door to competition today and address Intel's anticompetitive conduct in a way that may not have been available in a final judgment years from now. Everyone, including Intel, gets a greater degree of certainty about the rules of the road going forward, which allows all the companies in this dynamic industry to move ahead and build better, more innovative products."

In its own statement about the settlement, meanwhile, Intel made it clear that the deal does not require it to admit to any violation of law or to accept as accurate any facts alleged in the complaint.

"This agreement provides a framework that will allow us to continue to compete and to provide our customers the best possible products at the best prices," Doug Melamed, Intel senior vice president and general counsel, said in a statement. "The settlement enables us to put an end to the expense and distraction of the FTC litigation."

Update 8:01 a.m. PDT: Adds further details about the settlement, along with Intel's statement.