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US FTC cracks open anti-trust investigation on Intel

Alleged predatory pricing scrutinized

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AMD vs Intel The US Federal Trade Commission has opened a formal antitrust investigation into Intel, a move that brings mounting scrutiny on Chipzilla's pricing strategy and other business practices.

In the past few days, AMD, Intel and several of their customers in the personal-computer industry have received subpoenas issued in the investigation. They come as the FTC's counterpart in Korea fined Intel more than $25m for offering rebates that violate fair competition rules in that country. European antitrust officials filed similar charges last year, and are close to expanding their statement of official charges, according to The New York Times.

The FTC's investigation follows the same line of inquiry. It was authorized by the FTC's new chairman, William Kovacic and has the support of other commissioners. It marks a stark reversal of the commission's previous course, under which Deborah Majoras, Kovacic's predecessor, blocked a formal inquiry of Intel.

Over the past two years, AMD has waged a tireless legal and public-relations campaign against what it claims are practices designed to shut AMD out of the microprocessor market. Chief among those practices, AMD claims, are rebates Intel gives to customers in return for agreeing to limit purchases from the smaller chip maker. AMD filed a private lawsuit against Intel in 2005 in federal court in Delaware. A trial in that matter was recently delayed until 2010 to accommodate the mountain of evidence that's accumulated in the case so far.

"Intel must now answer to the Federal Trade Commission, which is the appropriate way to determine the impact of Intel practices on US consumers and technology businesses," AMD executive vice president and chief administrative officer Tom McCoy said in a statement. "In every country around the world where Intel's business practices have been investigated, including the decision by South Korea this week, antitrust regulators have taken action."

Intel confirmed it received an FTC subpoena earlier this week and said it was cooperating. "The company believes its business practices are well within US law," Intel said in a statement. "The evidence that this industry is fiercely competitive and working is compelling."

AMD maintains that the rebates Intel offers are an illegal attempt to maintain and extend its monopoly. Intel says the discounts aren't predatory, but rather a legal system that bases prices on the volume of processors a customer buys. ®

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