Intel Targeted in FTC Antitrust Probe
Page 1 of 1
The U.S. Federal Trade Commission has opened a formal antitrust investigation of semiconductor maker Intel for anticompetitive conduct, Intel and the FTC said on Thursday.
FTC spokeswoman Claudia Farrell confirmed the investigation existed, but declined to detail the agency's concerns about Intel (NASDAQ: INTC), which makes chips that power more than 80 percent of the world's computers.
But smaller rival AMD has long accused Intel of abusing its dominance of the chip market.
Intel received a subpoena from the FTC on Wednesday and will cooperate with the agency, the chipmaker said in a statement.
"The company believes its business practices are well within U.S. law," it added.
The FTC investigation is a second major blow this week for Intel, whose stock was down 2.7 percent at $23.23 in afternoon trading on the NASDAQ.
On Thursday, the Korea Fair Trade Commission in Seoul ruled that Intel abused its dominant position in the local market and imposed a fine of $25.6 million. Intel said it would almost certainly appeal.
The company also faces other investigations.
The New York state attorney general opened a formal probe of Intel in January. And one year ago, the European Commission in Brussels charged Intel with selling chips below cost and offering customers huge rebates in an illegal attempt to drive AMD (NYSE: AMD) out of the market.
The New York Times, which first reported the formal FTC investigation on Friday, said the agency's move to investigate reversed a decision by the former head of the agency, Deborah Majoras, who resigned, effective late March. The FTC is now headed by William Kovacic, a Republican.
In addition to the various government investigations, AMD filed its own lawsuit in 2005 in federal court accusing Intel of giving computer makers illegal discounts and retaliating against manufacturers who used AMD chips or stores that gave significant shelf space to computers with AMD chips. On Thursday, the Delaware court overseeing the case postponed a trial until 2010.
Speaking before the news of the investigation broke, Ashok Kumar of CRT Capital Group said Intel shareholders would be unmoved by the FTC's decision, which had been expected in Washington antitrust circles.
"Historically, the more aggressive posture has been taken by the commission across the pond in Europe," Kumar said. "I think the recent fine against Intel from South Korean regulators is more of a slap on the wrist."
Intel is likely to be unaffected by the new FTC probe, Kumar said.
"In the broader scheme of things, I think this is irrelevant," he added.