FTC and Intel settle antitrust action

THE US Federal Trade Commission reached a preliminary settlement yesterday with the computer giant, Intel, fending off a test of US antitrust legislation that had been set to rival the case against Microsoft.

The settlement came a day before the FTC was to start the formal hearing of complaints that Intel had used its near-monopoly position in the computer chip market to the detriment of would-be competitors.

No details were given, but both sides expressed satisfaction with the terms. The FTC filed a motion to withdraw the antitrust case and a formal decision, endorsed by the four-member commission, is expected by week- end.

The FTC charged that Intel had "coerced major established customers into granting access to their technology on terms favourable to Intel" and withheld details of its own technology that would have enabled them to compete. The action was a response to complaints by three companies - Intergraph, Compaq and Digital Equipment Corp - that Intel was soliciting confidential information with the aim of using it to improve its own products.

The principle of the case was similar to Microsoft's, which resumes in the Washington court next month, but there were key differences. The Microsoft case was brought by the Justice Department and is going through the judicial system, while that against Intel was brought by FTC and was to be heard by an FTC judge, leaving open the possibility of an appeal in open court.

The response of the two companies - which between them command more than 80 per cent of the world's computer market - was also different. Intel acknowledged the practices complained of, but defended them as part and parcel of free competition. Microsoft executives have denied the restrictive practices of which it has been accused, but found themselves frequently wrong-footed in the courtroom by their own e-mails and internal office communications.

The settlement, assuming it is approved by the FTC, was deemed to suit both parties. The FTC, according to lawyers in Washington, had no certainty of winning. Intel could see the legal complications and ill-feeling generated by the Microsoft case and feared a protracted case that could affect its already declining market share.

Intel said yesterday: "Intel is pleased with the agreement and we believe it provides adequate value for our intellectual property," but declined to comment further.