FTC Initiates Formal Probe of Intel

The Federal Trade Commission is investigating the chipmaker's business practices.
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It's been a bad week for

Intel

(INTC) - Get Report

on the legal front.

On Friday, U.S. federal regulators joined their counterparts abroad in examining the chipmaker's business practices.

Intel said it had received a subpoena from the U.S. Federal Trade Commission on June 4 relating to competition in the microprocessor market.

The FTC said that it has opened a formal antitrust probe of Intel, the world's No.1 chipmaker.

"I can confirm the existence of the investigation," said FTC spokesperson Mitch Katz.

Katz would not comment on details of the investigation, first reported by

The New York Times

, including the report that the inquiry relates to Intel's pricing practices. And he said he could not provide any kind of timeline about how the investigation might proceed.

The news of an FTC investigation comes a day after South Korean regulators fined Intel $25 million for anticompetitive practices.

The Korean fine is a drop in the bucket for Intel, which had revenue of $38.3 billion in 2007. But it may be symptomatic of a harder line that government competition watchdogs are taking toward Intel.

Shares of Intel were down 2.4%, or 57 cents, at $23.30 in a down day for the broader market.

Intel had a 78.9% share of the market for PC and server microprocessors in the first quarter, according to industry research firm IDC.

Advanced Micro Devices

(AMD) - Get Report

, Intel's main rival, which has long complained that it has been victimized by Intel's tactics, had a 20.9% share.

AMD sued Intel for antitrust in federal court in Delaware in 2005. The trial, which was due to commence next year, was reportedly pushed back until 2010 this week.

Last summer, European regulators formally charged Intel with abusing its dominant position in the microprocessor market.

Shares of AMD were off 14 cents at $7.64, ending a two-day rally in which the company's shares rose more than 12%.

Intel said it has been cooperating with an informal FTC inquiry regarding competition in the microprocessor market since 2006 and has provided the commission with thousands of documents.

By elevating its inquiry to a formal investigation, the FTC has the power to subpoena documents from Intel as well as other parties.

Intel said it believes its practices are well within U.S. law.

"The evidence that this industry is fiercely competitive and working is compelling," said a statement issued by Intel, citing a 42.4% decline in microprocessor prices between 2000 and 2007.

"When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly."