Just about all Intel will be left with is its list price if the Federal Trade Commission gets its way.
The two dozen far-reaching remedies that the US regulator is demanding in the complaint it lodged Wednesday for Intel’s alleged decade of stifling competition to maintain its monopoly and now extend it to the GPU market are draconian.
Intel wouldn’t be able to offer volume discounts or bundled prices; optimize its widgetry if the optimization disadvantages rivals; have any say over who’s using its IP to produce chips; write licenses without the government guiding its hand; sue competitors’ third-party fabricators to protect its IP; or even restrict licenses in case control of the licensee changes hands.
It even looks like the FTC wants Intel to drop what Intel figures is billions of dollars worth of IP on Nvidia for nothing – like hand it an x86 license along with its interoperability secrets to create a third source. The FTC wants to micromanage Intel’s advertising and promotional materials, riffle through all tests, reports, studies and demonstrations, oversee its mergers and acquisitions, plus any consolidations or combination of assets.
Intel pushed back hard after the Federal Trade Commission sued it Wednesday. Obviously it had to.
Its shiny new general counsel Doug Melamed, a graduate of the Justice Department’s Antitrust Division and the DOJ’s suit against Microsoft, accused the agency of basing its case on “unprecedented legal theories” and demanding “unprecedented remedies.”
The company called the agency’s case “misguided” and said “It is based largely on claims that the FTC added at the last minute and has not investigated. In addition, it is explicitly not based on existing law but is instead intended to make new rules for regulating business conduct. These new rules would harm consumers by reducing innovation and raising prices.”
The director of the FTC’s Bureau of Competition Richard Feinstein begs to differ, but allowed there was a real-time component to the case and said Intel’s $1.25 billion settlement of AMD’s massive antitrust suit a month ago didn’t go far enough.
Intel was kinda sandbagged by the suit. Evidently it lost control of the situation in Washington.
According to the story it tells, it thought it was negotiating a voluntary settlement with the FTC until the regulator suddenly brought a swat of new issues revolving around GPUs, Intel’s CPU compiler and compiler-related benchmarks to the table – some of them just last week – Intel said, complaining that the agency had done no discovery or taken any depositions on these new charges and was simply repeating complaints coming from Nvidia.
According to Melamed the “case could have, and should have, been settled. Settlement talks had progressed very far but stalled when the FTC insisted on unprecedented remedies – including the restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint – that would make it impossible for Intel to conduct business.”
He prophesied that “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. 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.”
See http://www.ftc.gov/os/adjpro/d9341/091216intelcmpt.pdf for the FTC’s complaint. The remedies start on page 19 and make quite a read if you can deal with the – ugh – language.
The agency is suing Intel for violating both Section 5 of the FTC Action and Section 2 of the Sherman Antitrust Act.
One of FTC’s commissioners, Thomas Rosch, dissented from the decision to use Section 2 at all on what he called public policy grounds.
He said, “The collateral consequences of including any Section 2 claims are very unfavorable for both Intel and the Commission. Intel currently faces a treble damage suit by the New York Attorney General under Section 2 in the United States District Court in Delaware in addition to a number of Section 2 treble damage class actions that have been filed there. The Commission should not enable those plaintiffs to free ride off of the Commissions work. Nor should it put itself in a position where an unfavorable outcome in those cases may be cited against it.”