Intel and FTC finally reach agreement on anticompetitive allegations

The Federal Trade Commission and Intel have at long last settled the anticompetitive conduct dispute, where Intel was accused of illegally getting the one-up on competition, such as AMD, in the chip market.

The FTC reckons that the new settlement will go beyond the previous limits to Intel’s monopoly, also applied by the FTC, and will “help restore competition that was lost” because of Intel’s alleged bullyboy tactics.

The settlement outlines that Intel is now prohibited from, in the words of the FTC:Conditioning benefits to computer makers in exchange for their promise to buy chips from Intel exclusively or to refuse to buy chips from othersRetaliating against computer makers if they do business with non-Intel suppliers by withholding benefits from them.

Essentially it is being asked to compete in a fair way, but all’s not fair in love, war and business. Intel must now change its intellectual property agreements with AMD, Nvidia and VIA so that the companies have increased freedom to consider mergers or joint ventures with other companies – without Intel breathing down their neck with legal threats about patent infringement.

Intel has thirty days after the order becomes final to offer each designated Intel competitor to amend patent agreements in writing by both parties. Competitors will be allowed to, without breaching the agreement, disclose licensed rights of the competitor’s patent agreements as long as a custom of the competitor or foundry agrees in writing to keep those terms confidential. 

Intel must also offer to extend, if Via wants it, the x86 licensing agreement five years beyond the current agreement terminating in 2013. It’s got to maintain its key PCI Express Bus for at least six years in a way that won’t limit performance of graphics processing chips.

According to the legal document, Intel may choose the specification of the PCI Express Bus, for example PCIe Base Specification 3.0, that will be included in each of its microprocessor platforms following the provision.

The FTC says these assurances will give incentives to manufacturers of complementary and potentially competitive products to Intel’s CPUs. It must also disclose to software developers that Intel computer compilers discriminate between Intel chips and chips from competitors, and that they may not register all features of non-Intel chips. Importantly, Intel is going to have to pay back all the software vendors who will want to recompile code using a compiler from one of Intel’s competitors.

Intel’s official line on the ruling is that it does not admit either any violation of law or that facts alleged in the complaint are true – and that the approved agreement is subject to a 30 day public comment period as well as final approval by the Commission, though Intel may be clutching at straws here.

Doug Melamed, who signed off the document, said: “This agreement provides a framework that will allow us to continue to compete and to provide our customers the best possible products at the best prices. The settlement enables us to put an end to the expense and distraction of the FTC litigation.”

In other words, it may shine badly on Intel that it has had so much said against it, but at least it won’t be putting as much into lawyers any more. Who are always, of course, the real winners.

The full settlement, signed by A. Douglas Melamed, Senior VP and General Counsel of Intel Corp and J. Robert Robertson of the Bureau of Competition, is available in full here