Intel and AMD settle antitrust dispute

I ntel sought to quell a rising tide of complaints over its business practices as it agreed on Thursday to pay $1.25bn to settle a private antitrust lawsuit from rival chipmaker Advanced Micro Devices.

The settlement of the dispute between the two chip companies ends one of the longest-
running and most heated disagreements in US business.

AMD, which is virtually Intel’s only rival in making the microprocessors used in PCs and many low-cost servers, has long complained that its much bigger rival uses unfair methods to prevent computer makers buying its chips.

Those complaints, which Intel denies, have already led to regulatory action against the company in Japan, South Korea and the European Union, and last week brought a lawsuit from Andrew Cuomo, New York attorney-general. The new Federal Trade Commission, which has promised a more aggressive approach to antitrust enforcement than its predecessor, has also begun an investigation of its own.

Legal experts warned that the settlement would do little to stop spreading regulatory action against Intel, the world’s biggest maker of microprocessors. Europe this year imposed a record €1.06bn ($1.57bn) fine on the company.

Regulators on both sides of the Atlantic signalled that, while they would look at the AMD settlement, the agreement would not change their own scrutiny of Intel’s behaviour.

As part of the settlement, Intel said that it had undertaken not to engage in some of the practices it has been accused of by AMD and regulators. These include promising discounts to PC makers only if they refuse to buy chips from AMD or hold back the launch of machines carrying AMD products.

Intel denied on Thursday that it had bullied AMD in this way, and said that it had only given the undertakings as a way to resolve the legal dispute. Paul Otellini, chief executive, also said it had agreed to the massive payment to reduce the risk of the court case, which might have led to a much bigger judgment, and said that Intel maintained it had done nothing wrong.

Jon Leibowitz, the FTC’s chairman, said that while the agency would review the “private litigation”, he could not comment further given his own agency’s “ongoing independent investigation”.

John Briggs, a Washington antitrust lawyer who formerly represented Intel, said: “The FTC has an incentive to go ahead and file a complaint if they were going to do so anyway – they are not going to settle their case because AMD is no longer a complaining party.”

AMD shares rose 21.2 per cent to $6.45 by late afternoon in New York, while Intel stock was down 0.9 per cent at $19.66.