SAN FRANCISCO -- As expected, the U.S. Federal Trade Commission on Wednesday (Aug. 4) made public details of its settlement agreement with Intel Corp. over charges that Intel used anticompetitive tactics that stifled innovation and harmed consumers in the market for computer microprocessors, graphics processing units and chip sets.
Intel (Santa Clara, Calif.) was not fined under the deal. Terms of the settlement include numerous provisions similar to those agreed to by Intel in a November 2009 settlement with rival Advanced Micro Devices Inc.
Dean McCarron, principal of market watcher Mercury Research, noted that the settlement with the FTC offered a significantly different outcome for Intel than what occurred in Europe in 2009, when the European Commission, the regulatory arm of the European Union, fined Intel 1.06 billion euros ($1.45 billion) for anticompetitive behavior. Intel continues to appeal that ruling.
"I suspect that one of the factor shere was the AMD settlement," McCarron said. "In many respects the FTC settlement is echoing what was in the AMD settlement, which was on par with the settlement that occurred in Europe."
McCarron said he didn't see a lot of winners and losers in the agreement, which he desicribed as "codifying the status quo."
“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,” Doug Melamed, Intel senior vice president and general counsel, said in a statement. “The settlement enables us to put an end to the expense and distraction of the FTC litigation.”
Intel admitted no wrong doing as a condition of the settlement. The deal approved by the FTC is subject to 30 days of public comment and final approval by FTC commissioners.
Among other things, Intel agreed not to offer discounts on microprocessors in exchange for agreement to also purchase other Intel chips such as graphics processors. The settlement also imposes other restrictions on the types of discounts Intel can offer OEMs.
Intel also agreed not to use retaliatory tactics against OEMs that buy products from competitors and to use a standard PCI bus on all mainstream microprocessors. It also will begin sharing technical information on required interfaces for its microprocessors with competitors for a period of five years.
McCarron said he was little surprised by some of the technical details in the settlement, including the requirement that Intel include PCI Express (PCIe) interfaces in its microprocessors. He said he suspects this was heavily lobbied for by graphics chip vendor Nvidia Corp., one of the Intel competitors considered in the FTC investigation.
"The settlement essentially guarantees that PCIe is going to be present within the system for at least six years," McCarron said. "That means Nvidia is going to have a place to connect their graphics. They can't be locked out this way."
McCarron noted that Nvidia and Intel still have litigation pending over a bus licensing agreement between the two companies that would not be impacted by the FTC settlement.
A spokesperson for Nvida said the company supports the FTC's action against Intel. "Any steps that lead to a more competitive environment for our industry are good for the consumer," the spokesperson said, in a prepared statement. "We look forward to Intel's actions being examined further by the Delaware courts later this year, when our lawsuit against the company is heard."
The settlement gives regulators the right to appoint technical consultants to monitor Intel's compliance at Intel's expense. It also requires Intel to offer reimbursement on Intel Compiler to those who were harmed because they did not realize the software was optimized specifically for Intel processors.