Witness: FTC is broadening assault on Intel
By Lisa DiCarlo
2/23/99 12:17:00 PM
As expected, the Federal Trade Commission's antitrust case against Intel Corp., which begins March 9, will go far beyond its original scope.
In addition to the original complaint, the FTC will pursue Intel's pricing and discount practices, its flow of critical information to OEMs and its entry into adjacent markets, said one deposed person who is scheduled to testify at the hearing.
The source said that, during his deposition, FTC investigators seemed intent on showing a pattern of favoritism among OEM customers.
For example, the FTC probed about Intel's pricing, including whether
it offers lower prices to companies that don't rock the boat by
partnering with Intel competitors, the source said.
"I told them the truth,'' said the source. ''We know other companies
-- who play Intel's game -- have paid 2 to 3 percent less for [certain] chips, which gives them a pricing advantage.''
Along that same line, the FTC is also interested in Intel's flow of
information to OEMs. The issue here is that some OEMs have
complained that the microprocessor giant dispenses critical chip
and chip-set information needed to design next-generation systems
earlier to some companies than to others.
Again, the theory is that Intel loyalists get first crack at new
architectures, which often results in a time-to-market advantage.
This area encompasses part of the FTC's original complaint, which
accuses Intel of forcing three OEMs to give up intellectual property
by withholding design information from them. The companies --
Compaq Computer Corp., Digital Equipment Corp. and Intergraph
Computer Systems Inc. -- had all been engaged in intellectual
property legal disputes with Intel during the times in question.
The facts are not in dispute. Intel (Nasdaq:INTC) says it has a right
to withhold its intellectual property from companies that are suing it.
OEMs argue they cannot do without Intel's information because they
can be put out of business if they miss product cycles due to lack
of design information.
The FTC may get some help from an earlier ruling, by Alabama Judge Edwin Nelson, who is presiding over the Intergraph/Intel lawsuit. Last summer, he concluded that Intel is a monopoly, and that its chips are an "essential facility," meaning that customers cannot survive long-term without them.
Adjacent moves
The source said the FTC is also exploring Intel's moves into adjacent markets, such as chip sets and motherboards and the subsequent effect on companies that make those products. Historically, makers of these products have seen their market share almost immediately nose-dive after Intel makes a play.
The FTC's original complaint was widely criticized as weak because
the three companies do not compete with Intel in its core
microprocessor business. Restricted competition is at the center of
antitrust violations.
Executives and attorneys for Intel will not be surprised by this news,
since they get to interview FTC witnesses about their depositions,
including how they plan to answer questions. The source quoted in
this story was interviewed by Intel three weeks ago. |
