Federal Trade Commission Sues Intel Over Antitrust Practices

Strategic Insights -

The Federal Trade Commission (FTC) has filed an antitrust suit against the Intel Corporation, accusing the company of threatening and injuring three computer manufacturers, including Compaq Computer Corporation, in an attempt to coerce them to turn over patented technologies. The suit asserts that Intel's pattern of withholding technical data as a weapon in patent disputes stifles innovation in the microprocessor industry, thereby enhancing Intel's dominant position. The company is alleged to have withheld information about its chips from the manufacturers, while sharing it with their competitors.

Key Takeaways:

  • The FTC accuses Intel of threatening and injuring three computer manufacturers, including Compaq, in an attempt to coerce them to turn over patented technologies.
  • Intel is accused of withholding technical information from Compaq, Digital Equipment Corporation, and Intergraph Corporation, while sharing it with their competitors.
  • The Government's charges assert that Intel's pattern of withholding technical data stifles innovation in the microprocessor industry, enhancing Intel's dominant position.
  • The suit claims that Compaq was forced to license the technology to Intel to end the cutoff of information, and that Intel then began supplying the technical information again.
  • Intel has long asserted its right to give or withhold information about its microprocessors, and the company says it will argue the case based on the premise that the Government is trying to enforce a new legal theory.
  • The company's executives concede every factual element of the case, but disagree with the Government's interpretation of the law and the facts.
  • Intel says it will take similar actions again if the need arises, and argues that the Government is trying to change the very laws upon which the company has based its policies.

Statistics:

  • The suit alleges that Intel's withholding of technical information resulted in Compaq agreeing to license the technology to Intel in 1994.
  • Compaq was the world's largest manufacturer of personal computers at the time of the suit.
  • Intel's vice president and general counsel, F. Thomas Dunlap, stated that the company had taken unprecedented steps to ensure compliance with existing law for over 10 years.
  • The company says it has 100 years of case law on its side, supporting its right to control its intellectual property.
  • The commission's decision to file the suit signals that they want to change the laws upon which Intel has based its policies.
  • Intel's monopoly position in the market for microprocessors is cited as a reason why other firms will have little incentive to invent new features to challenge Intel's dominance.

Sources:

  • The New York Times, [No date available], "Federal Trade Commission Files Suit Against Intel Over Antitrust Practices"
  • William J. Baer, director of the commission's Bureau of Competition, as quoted in The New York Times, [No date available], "Federal Trade Commission Files Suit Against Intel Over Antitrust Practices"
  • F. Thomas Dunlap, Intel's vice president and general counsel, as quoted in The New York Times, [No date available], "Federal Trade Commission Files Suit Against Intel Over Antitrust Practices"
  • Chuck Mulloy, Intel spokesman, as quoted in The New York Times, [No date available], "Federal Trade Commission Files Suit Against Intel Over Antitrust Practices"
  • Jim Meadlock, Intergraph's chairman, as quoted in The New York Times, [No date available], "Federal Trade Commission Files Suit Against Intel Over Antitrust Practices"