Intel: FTC antitrust lawsuit is 'misguided'

Intel has responded to a graphics chip antitrust lawsuit filed by the US Federal Trade Commission, calling the action "misguided" and ill-researched.

One of the principal claims in the FTC complaint, filed on Wednesday, concerns Intel's practices in the market for graphics processing units (GPUs). The company responded by arguing that the US regulator's charges about that market were added as an afterthought.

"The FTC's case is misguided. It is based largely on claims that the FTC added at the last minute and has not investigated," the chipmaker said in a statement on Wednesday. "Intel has competed fairly and lawfully. Its actions have benefitted consumers."

The company said it had progressed "very far" in talks to settle the case, rather than bring it to court. However, the FTC had asked for remedies that would have made it "impossible" for Intel to conduct business, according to the chipmaker.

"This case could have, and should have, been settled," said Intel senior vice president and general counsel Doug Melamed in a statement. "The FTC's rush to file this case will cost taxpayers tens of millions of dollars."

In November, Intel settled an antitrust dispute with AMD, in a deal that includes a $1.25bn (£763m) payment to its chip rival.

In addition, Intel was ordered to pay a €1.06bn (£944m) fine over its anti-competitive practices in May, when the European Commission found the chipmaker had illegally tried to dissuade PC manufacturers and retailers from using AMD's products.

Graphics chips in the spotlight
One of the key points distinguishing the FTC's case from previous disputes is its focus on graphics chips, such as those sold by Nvidia.

"These products have lessened the need for CPUs, and therefore pose a threat to Intel's monopoly power," the FTC stated. "As part of this latest campaign, Intel misled and deceived potential competitors in order to protect its monopoly. There also is a dangerous probability that Intel's unfair methods of competition could allow it to extend its monopoly into the GPU chip markets."

Intel has seen a decade of practices designed to prevent potentially superior products from threatening its leading position in the market, the regulator added.

"Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," said Richard A Feinstein, director of the FTC's Bureau of Competition, in a statement.

Nvidia's chief executive, Jen Hsun Huang, welcomed the FTC's lawsuit, saying it had the potential to "completely transform the computer industry".

"Today's FTC announcement highlights the industry-changing impact of the GPU and the importance of our work," Huang said.

Nvidia is the largest maker of discrete GPUs, but Intel dominates the overall market for graphics silicon, as it integrates the graphics technology into its chipsets.

The FTC alleges that in the fast-growing market for netbooks — miniature, low-priced laptops — Intel used pricing bundles around its Atom chip to lock out competing GPUs and chipsets from companies including Nvidia. Nvidia's ION chipset competes with Intel's integrated graphics chipset in this market.

The regulators also claim that Intel's bundle pricing required manufacturers to use the Intel chipset in their products and prohibited them from, for instance, using Intel's CPU with a competitor's chipset and reselling the unused portions of Intel's chipset.

"To combat competition, Intel charged (PC makers) significantly higher prices because they used a non-Intel graphics chipset or GPU," the FTC stated. "Intel would offer the bundled pricing only to OEMs that would then use the Intel chipset in the end product — and not use a competitive product."

The regulators also highlighted a legal action by Intel against Nvidia in February that forced Nvidia to halt development of its chipsets for Intel's Nehalem processor.

"Intel now has reversed its previous course of allowing Nvidia integrated GPU chipsets to interoperate with Intel CPUs, thereby foreclosing Nvidia's integrated GPU chipsets from connecting to Intel's future CPU platforms," the FTC complaint alleged.

In a filing in February's legal action, Intel said its chipset licence agreement with Nvidia did not extend to Nehalem processors. The company said it discussed the matter with Nvidia for more than a year without being able to reach an agreement.