Intel settles claim that it tried to stifle rivals
Thursday 05 August 2010
Intel, the world's largest maker of computer chips, has agreed to stop using anti-competitive practices against its rivals. The move will settle accusations that it abused its market dominance, the US Federal Trade Commission (FTC) said.
Intel, which makes 80 per cent of the world's microprocessors, also agreed to give makers of complementary products such as graphics chips access to its central processing units for the next six years. The deal forbids Intel from retaliating against computer makers if they do business with non-Intel suppliers. "It is a landmark settlement that will have a striking effect on improving competition in the market," said David Balto, a former policy director at the FTC.
The company, which denies any wrongdoing, said it did not believe the changes it had agreed to in its business practices would materially affect its financial results. "The settlement enables us to put an end to the expense and distraction of the FTC litigation," said Doug Melamed, a senior vice-president at Intel. The news sent the company's share price down by about 1 cent to $20.69 at noon on the Nasdaq market in New York.
Intel has been under attack from rivals for years over its aggressive pricing and sales tactics in marketing of chips that essentially make up the "brains" of computers. Urged on by Intel's arch-rival Advanced Micro Devices (AMD) and the graphics chip-maker Nvidia, the FTC accused Intel last year of illegally using its market dominance to stifle competition. Intel is now barred from offering deals to computer makers in exchange for their promises to buy exclusively from Intel. It is also required to change its intellectual property deals with AMD, Nvidia and Via.
In November, Intel paid AMD $1.25bn (£787m) as part of a deal to settle all outstanding legal disputes between the two companies. A month later, the New York attorney general, Andrew Cuomo, filed a lawsuit against Intel, saying it used "illegal threats" to dominate microchip sales. Intel is still fighting a record $1.45bn antitrust fine in Europe and separate cases in South Korea and Japan. In July, it reported a profit of $2.9bn for the three months to 26 June, against a loss of $398m a year before.
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