Intel/FTC Deal Could Stoke Chip Competition

SANTA CLARA, Calif. ( TheStreet) -- Intel ( INTC) has reached a settlement with the FTC, resolving a major antitrust case that might have big implications for rivals like AMD ( AMD), Nvidia ( NVDA) and Texas Instruments ( TXN).

FTC officials announced the settlement on Wednesday, explaining that the deal resolves charges that Intel illegally stifled competition in the market for computer chips. "Intel has agreed to provisions that will open the door to renewed competition and prevent Intel from suppressing competition in the future," said the FTC in a statement.

In other words, the settlement should help to level the playing field for smaller chipmakers.
Intel

The dominant player in the microprocessor market, Intel has repeatedly been accused of throwing its weight around. The FTC sued Intel in December, alleging that the tech giant used anticompetitive tactics to hinder other chipmakers. At the time, officials said they were attempting to end a decade of illegal Intel sales practices that hampered rivals and kept chip prices artificially high.

The settlement applies to central processing units (CPUs), graphics processing units (GPUs) and chipsets, according to the FTC. This "prohibits Intel from using threats, bundled prices, or other offers to exclude or hamper competition or otherwise unreasonably inhibit the sale of competitive CPUs or GPUs," said the FTC.

Officials explained that the settlement also prohibits Intel from deceiving computer manufacturers about the performance of non-Intel CPUs or GPUs. "This case demonstrates that the FTC is willing to challenge anticompetitive conduct by even the most powerful companies in the fastest-moving industries," explained FTC Chairman Jon Leibowitz.

Under the terms of the settlement, Intel is also required to modify its intellectual property agreements with AMD, Nvidia and VIA Technologies so that they have more freedom to consider mergers or joint ventures with other companies, without the threat of being sued for patent infringement.

AMD shares rose 4 cents, or 0.53%, to $7.55 on Wednesday, while Texas Instruments climbed 13 cents, or 0.52%, to $24.94, mirroring the modest advance in tech stocks that saw the Nasdaq gain 0.52%. Nvidia's stock, however, climbed 21 cents, or 2.36%, to $9.15.

In its own statement on the settlement, Intel said that it does not admit to either any violation of law or "that the facts alleged in the FTC complaint are true."

"This agreement provides a framework that will allow us to continue to compete," said Doug Melamed, Intel senior vice president and general counsel. "The settlement enables us to put an end to the expense and distraction of the FTC litigation."

Intel shares dipped 4 cents, or 0.21%, to $20.67 on Wednesday.

-- Reported by James Rogers in New York

Follow James Rogers on Twitter.

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