Heartland Institute Experts Question FTC Suit Against Intel

Published December 16, 2009

On Wednesday, December 16, 2009, the Federal Trade Commission sued Intel Corp., accusing the microchip maker of engaging in anti-competitive practices. The FTC is asking for an order that would bar Intel from using “threats, bundled prices, or other offers to encourage exclusive deals, hamper competition, or unfairly manipulate the prices of its” chips.

James G. Lakely, co-director of the Center on the Digital Economy at The Heartland Institute and managing editor of InfoTech & Telecom News is critical of the FTC’s action, as is attorney Maureen Martin, senior fellow for legal affairs at The Heartland Institute. You may quote from this statement or contact them directly.

“The microprocessor market is among the most competitive in the world — one that has led to ever-lower prices and ever-faster speeds for electronics. The FTC’s suit will serve only to weaken those competitive forces, substituting its own judgment for that of consumers making free choices in the marketplace.

“There is irony in the FTC’s claim that ‘threats’ by Intel allow it to ‘unfairly manipulate the prices’ of its chips. Upon the announcement of the FTC’s lawsuit, Intel’s stock price dropped and AMD’s spiked dramatically upward. Who’s really the threatening market manipulator here?

“It should not be the job of the federal government to punish Intel if the company’s competitors are not willing to match or top Intel’s technology or marketing strategies. Though the target may be Intel, consumers will be the ones ultimately punished through artificially higher prices and less vibrant innovation.”

James G. Lakely
Co-director, Center on the Digital Economy at The Heartland Institute
Managing Editor, InfoTech & Telecom News
The Heartland Institute
(626) 421-9414
[email protected]

“Rather than filing an antitrust complaint against Intel at this late date, the FTC should hang its head in shame.

“Historically, it’s common for a company to beseech the government to pursue antitrust enforcement against its competitor, hoping the government action will damage the business of the enforced-against party. After the enforcement action has advanced, the company then uses evidence from that action to support a separate civil suit. That may be what is going on in the European Union, where AMD complaints about Intel dating back to 2000 led to EU enforcement. Earlier this year, the EU ordered Intel to pay a $1.45 billion fine, which Intel is appealing.

“Here in the U.S., though, precisely the opposite happened. Before any government action was brought, AMD sued Intel in the U.S., which led last month to a $1.25 billion settlement. Only now is the FTC getting into the action, letting private parties and the EU gather evidence for the FTC to use The FTC has broad enforcement powers, supposedly to protect the public. Yet it waited for nearly a decade to bring enforcement action, eventually saying ‘me, too.’ This is an embarrassment.”

Maureen Martin
Senior Fellow for Legal Affairs
The Heartland Institute
(920) 229-6670
[email protected]