Antitrust: Intel vs. Advanced Micro Devices

San Jose, CAA computer chip giant that enjoys 80 percent of the global market is allegedly making life impossible for a competitor attempting to survive with 20 percent. Worse, is the accusation that Intel Corp. has violated antitrust laws in securing that dominant position.

Earlier this month Intel was fined $25.4 million dollars by South Korea's antitrust regulator for various irregularities pertaining to that country.

As for the United States, the Federal Trade Commission (FTC) has escalated a two-year informal probe to a formal investigation by the issuance of subpoenas against Intel Corp and its rival Advanced Micro Devices Inc (AMD), which accuses Intel of stifling its growth through the use of unfair tactics.

Specifically, it is AMD's belief that Intel has maintained its position in the global microprocessor marketplace by offering certain incentives that constitute a breach of anti-trust laws, and by threatening computer manufacturers with higher prices if they don't stick with Intel products. With already 80 percent of the global microprocessor market, Intel is not only a tough act to follow for a much smaller competitor, it's also easy for a client to give in when such a formidable enterprise starts in with the alleged arm-twisting.

In 2003 AMD is said to have taken a large bite out of Intel's share of the lucrative server market. However, Intel's allegedly illegal tactics, combined with production delays in the manufacture of new computer chips, have cancelled out a lot of the momentum AMD had gained over Intel in that sector.

While AMD is undoubtedly pleased that the FTC investigation into alleged antitrust violations on the part of Intel is moving forward, it must wait until at least 2010 before a trial to hear arguments stemming from a lawsuit AMD has launched against Intel, will commence.

Both companies have been issued formal subpoenas, which is a sign that the litigation is moving forward. "Intel must now answer to the Federal Trade Commission, which is the appropriate way to determine the impact of Intel practices on U.S. consumers and technology businesses," said Tom McCoy, AMD's executive vice president and chief administrative officer.

Bruce Sewell, serving as Intel's general counsel, indicated various documents that might have shed a more definitive light on the issue were not being voluntarily released due to a protective order issued with reference to the pending trial. The voluntarily releasing of documents with such an order in place would have been strictly forbidden.

However, now that Intel has been formally subpoenaed, the FTC can now secure documents showing Intel's communications with customers involved in the disputed transactions, he says.

Intel maintains that it has been operating within the letter of the law, and says it is co-operating fully with the FTC. The company also suggests that a tantrum on the part of a smaller competitor is emblematic of just how fiercely competitive the industry is.

Still, the FTC investigation is but one of several probes that have been launched globally against Intel, including scrutiny in the US and by various members of the European Union. Among them, South Korea—which has already investigated and fined Intel $25.4 million.

AMD might be hoping there is more where that came from. However it might have to wait until 2010 to find out if the allegation of antitrust activity is proven in the courts of law.