FTC Won't Seek Intel Breakup

The Federal Trade Commission's punitive campaign against chip making giant Intel will not include efforts to break up the company , a senior official said. The FTC has "no goal of breaking up Intel," said Richard Feinstein, director of the FTC's Bureau of Competition, in a call with reporters Wednesday. The FTC announced its suit against Intel earlier in the day, claiming the company uses its dominance to stifle competition in the market for microprocessors that run personal computers. The U.S. government has, or has threatened to, force the breakup of companies it deems to be exercising monopoly control over certain industries. AT&T was broken up in 1984, and the Department of Justice sought to break up Microsoft in 2001. Intel shares were off .52%, to $19.28, in pre-market trading Thursday.

The FTC, however, will be satisfied if Intel modifies what the Commission claims is anticompetitive behavior. "We're not seeking divestiture," said Feinstein. Feinstein also said the FTC will not seek to impose financial penalties on Intel.

The FTC claims Intel bullied computer manufacturers, including IBM, Hewlett-Packard, and Dell, into using its chips in their systems instead of offerings from rivals such as Advanced Micro Devices. It also claimed Intel used a tactic known as restrictive dealing to prevent system builders from marketing non-Intel machines. The FTC's complaint further alleges that Intel redesigned its compiler software in a way that hampered the performance of competitors' microchips. The Commission said Intel's behavior violates Section 5 of the FTC Act, which prohibits unfair methods of competition.

The FTC is seeking an order that would prohibit Intel from "using threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its CPU or GPU chips," according to a statement released by the Commission.

Intel hit back at the FTC late Wednesday, calling the antitrust suit misguided and not based on existing law. "The FTC's rush to file this case will cost taxpayers tens of millions of dollars to litigate issues that the FTC has not fully investigated," said Intel senior VP and general counsel Doug Melamed, in a statement. "It is the normal practice of antitrust enforcement agencies to investigate the facts before filing suit. The Commission did not do that in this case," said Melamed.