FTC Accuses Intel Of Stifling Competition
ROBERT SIEGEL, Host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.
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NPR's Jim Zarroli reports.
JIM ZARROLI: With the annual revenue of $37 billion, Intel is far and away the world's biggest manufacturer of computer chips. The FTC says it controls 75 to 80 percent of the chip market. And Richard Feinstein, who directs the FTC's Bureau of Competition, says it knows how to use its power.
RICHARD FEINSTEIN: Intel has for many years been the dominant manufacturer of those chips. And we've alleged that they have engaged in a variety of conduct that has enabled them to maintain and prolong that dominance.
ZARROLI: It did that, the FTC says, by punishing computer makers that bought too many chips from any of its rivals. It says even major computer makers like IBM and Hewlett-Packard were forced to play ball. If they did business with anyone else, Intel would allegedly raise prices, shut off supply and withdraw marketing support.
FEINSTEIN: All of which, taken collectively, had the effect of communicating very effectively to their customers that they would be penalized for doing a substantial amount of business with Intel's competitors.
ZARROLI: The government says Intel refused to let the new chips operate alongside its own, making them a lot less desirable for computer makers. U.S. officials said this was an attempt to kill off a competing product. Intel spokesman Chuck Mulloy says it was just a contract dispute. As for the suit filed today, Mulloy says Intel tried to settle the case.
CHUCK MULLOY: But the commission at the 11th hour decided to add new allegations, new charges, made new demands that they did not investigate.
ZARROLI: Mulloy says the talks fell apart because the FTC made unreasonable demands on the company.
MULLOY: They have essentially said under almost no circumstances can Intel discount its products going forward. At the end of the day, if that ends up being the law of the land, prices will increase for microprocessors.
ZARROLI: Jim Zarroli, NPR News, New York.
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