Mar 31, 2005 (04:03 PM EST)
Intel Accepts Order To Stop Unfair Trade Practices In Japan

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SAN JOSE, Calif. — Intel Corp. late Thursday (March 31) said it has accepted a recommendation from the Japan Fair Trade Commission (JFTC) to stop alleged unfair trade practices in the Japanese market.

JFTC's recommendation directs Intel's Japanese subsidiary, Intel K.K., to stop sales practices that it alleges shut out competitors from the Japanese microprocessor market.

It is unclear whether the agency will assess a penalty or will fine Intel. The JFTC has been conducting an antitrust probe against Intel since last year over alleged unfair business practices in Japan.

Issued on March 8, the JFTC recommendation alleged that Intel has abused its monopoly power to exclude fair and open competition, thereby violating provisions of Japan's Antimonopoly Act. The findings reveal that Intel used illegal tactics to stop Advanced Micro Devices Inc.'s increasing market share by imposing limitations on Japanese PC manufacturers.

Although Intel said it accepts the recommendation, it also disagreed with the facts underlying the JFTC's allegations and the application of law in its recommendation. Intel said it continues to believe its business practices are both fair and lawful, but added that the cease-and-desist provisions of the recommendation will not prevent it from continuing to meet customer requirements.

"Intel respectfully disagrees with the allegations contained in the recommendation, but in order to continue to focus on the needs of customers and consumers, and continue to provide them with the best products and service, we have decided to accept the recommendation," Bruce Sewell, Intel's vice president and general counsel, said in a statement.

"We believe the recommendation's cease-and-desist provisions define a workable framework that enables us to continue to provide competitive pricing to our customers, and benefits consumers and the Japanese economy," he said. "We do not accept the recommendation's allegations in its fact findings and the application of law. We believe the allegations misinterpret important aspects of our business practices and fail to take into account the competitive environment within which Intel and its customers compete."

JFTC has been conducting an antitrust probe against Intel since last April. The agency searched several locations, including Intel Japan's headquarters. It also interviewed two competitors and five major Japanese PC manufacturers: Fujitsu, Hitachi, NEC, Sony and Toshiba.

Intel, AMD and Transmeta supply virtually all microprocessors sold to PC manufacturers in Japan, and non-Intel processors accounted for only 24 percent of the Japanese market in 2002. With Intel's rebates, the non-Intel share dropped to 11 percent in 2003, according to the agency's findings.

Intel has allegedly offered commissions to customers when they used only its processors or limited their use of non-Intel processors to less than 10 percent of their total orders. The JFTC alleges that Intel's sales tactics shut out competitors in the Japanese microprocessor market in violation of its antitrust laws.