Intel hit with lawsuit over competition abuses

Intel, the world's leading microchip maker, which is already facing the largest European Union fine for anti-competitive practices, was yesterday hit with further legal action in its main market, the US.

The company has been accused by the US Federal Trade Commission (FTC) of abusing its dominant position by offering deep discounts to computer manufacturers that agreed not to use any other company's chips.

Intel had been hoping to settle the long-running investigation, particularly after agreeing to pay rival Advanced Micro Devices (AMD) $1.25bn (£760m) last month to end years of litigation.

The company reacted angrily to the FTC's decision to launch a civil lawsuit. Doug Melamed, Intel's senior vice president and general counsel, said: "The commission insisted on unprecedented remedies – including the restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint – that would make it impossible for Intel to conduct business."

Intel, which has a market share of about 80 per cent, has been found in violation of monopoly laws in several countries, including Japan, and in the EU, where it was ordered to pay €1.06bn (£940m) in May.

"Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," Richard Feinstein, director of the FTC's bureau of competition, said yesterday. "It's been running roughshod over the principles of fair play and the laws protecting competition on the merits."

The FTC's move is in line with US President Barack Obama's promise to pursue a more aggressive stance on competition issues than the previous Bush administration.

Under its settlement with AMD, Intel agreed to "abide by a set of business practice provisions" that included refraining from giving financial incentives to companies that limit their use of AMD chips. The FTC decided those promises, nor others offered by Intel during settlement talks, did not go far enough towards preventing abuse.