Chips are stacked against FTC in Intel case
Sep 29 1997 1:30AM CST, The Financial Post
The U.S.'s Federal Trade Commission faces a big hurdle in trying to
build any potential antitrust case against Intel Corp. -- a shortage of
witnesses.
The agency, which is conducting a broad inquiry of Intel's business
practices, is expected to seek examples of its anticompetitive actions
pointing to monopolistic tactics in sales of microprocessors and other
components that are vital to the personal computer industry.
If the past is any guide, it won't be easy getting incriminating testimony from
Intel's customers and even many competitors, either because of loyalty to Intel
or fear of potential retaliation.
``Who is going to testify against Intel?'' asked Ashok Kumar, an analyst at
South Coast Capital, an investment bank in Austin, Tex. ``Nobody is really
going to be that dumb.''
The difficulty of finding evidence, and the fact an earlier FTC investigation of the
chip maker went nowhere, contributed to a mild reaction to news of the inquiry
this week. Indeed, several analysts said they doubted the inquiry will force Intel
to restrain its practices.
Intel spokesman Chuck Mulloy in Santa Clara, Calif., said the company
believes it is in full compliance with the law. Intel's senior executives and
marketing and sales staffs receive regular training about what they are allowed
to do, given their firm's overwhelming 88% market share in microprocessors.
Lawyers review every sales and marketing plan, and are assigned to each of the
company's operating groups. Intel has had the antitrust-compliance training in
effect since the late 1980s, which apparently helped it sail unscathed through the
last FTC investigation in 1991-93.
An 18-page FTC civil investigative demand sent to one Intel competitor
indicates several thrusts of the investigation.
It asks for evidence of Intel withholding chips or information to retaliate against
customers who use competing microprocessors; restrictions placed upon
customers that accept marketing help from Intel; and Intel's handling of technical
specifications that help determine competitors' capabilities.
In its demand for information, the FTC appeared to be addressing the ``fear
factor'' of Intel customers. In the past investigation, said one industry executive,
it merely circulated requests for information.
This time, the investigative demands are compulsory and respondents must
notify the FTC of any communication they have had with Intel in connection
with the investigation.
Intel customers haven't been entirely quiet. Digital Equipment Corp., which
makes competing chips and sells PCs that use Intel chips, sued for patent
infringement and complained when Intel threatened to cut off future supplies of
some chips. Intel backed off after Digital raised antitrust issues.
(Copyright The Financial Post) |
