Paul Engle, Thread, FTC & Chips & Technologies near settlement:
INTEL - The Wall Street Journal (J) STORY 2
FTC Expected to Clear Intel Purchase
Of Chip Maker Amid Continuing Probe
By John R. Wilke
Staff Reporter of The Wall Street Journal
4048 Characters
01/13/98
WASHINGTON -- The Federal Trade Commission is expected to approve
Intel Corp.'s $420 million acquisition of Chips & Technologies Inc., a
leading maker of graphics chips, even as it continues a broader probe of
Intel's market power.
Lawyers familiar with discussions between the agency and the
companies said they expected the FTC to allow the transaction to
proceed, but also to put Intel on notice that it could take action later
and will continue to investigate the industry. The transaction had been
delayed by the FTC's review, which lasted more than six months and
focused on whether Intel could use its near-monopoly in
personal-computer chips to dominate the market for advanced
computer-graphics chips as well, thereby stifling innovation.
That concern mirrors the Justice Department's concern about the other
major force in the vast PC industry, Microsoft Corp., which stands
accused in federal court of using its monopoly in Windows operating
software to dominate Internet software.
The FTC's review of the Chips & Technologies transaction has been
closely watched because of the agency's broader investigation of Intel's
lock on the market for PC chips. The Santa Clara, Calif., company makes
the silicon chips that power most PCs that run Microsoft Windows.
Together, these products are pillars of the modern PC industry.
In September, the FTC sent civil subpoenas to competitors and
customers across the industry demanding information on whether Intel
violated the law "by acting to monopolize, attempt to monopolize or
otherwise restrict price or nonprice competition in the development or
sale of microprocessors or other computer components or related
intellectual property." An FTC spokeswoman refused comment; a spokesman
for Intel said the company had no immediate comment.
FTC investigators were most interested in whether buying Chips &
Technologies would improperly allow Intel to incorporate graphics
features into its main line of microprocessors, hurting other makers of
separate graphics chips. Some of Chips & Technologies' competitors
complained to the agency about that possibility, and about Intel's
control of standards, people familiar with the investigations have said.
Rich Gray, an antitrust attorney in San Jose, Calif., who is
following the FTC review, argues that graphics chips and microprocessors
are such separate markets that the FTC had no justifiable grounds to
block the transaction but sent a message by the length and depth of the
investigation that it is now watching the chip giant closely.
Indeed, in an unusual move, FTC Chairman Robert Pitofsky called
lawyers for the companies to his office Friday to tell them that the
agency's tentative decision to allow the deal to go ahead didn't mean
the broader investigation was winding down.
The FTC decision comes as the agency is also investigating several
aspects of Intel's business dealings, including its settlement last year
of a suit with Digital Equipment Corp. Mr. Gray argued that the FTC
could seek to modify or even block that settlement, since the deal
affects two competing microprocessor lines, Digital's Alpha chip and
Intel's Pentium line.
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Don Clark in San Francisco contributed to this article. |
