Trial Won't Help Consumers, Intel Says

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February 24, 1999 (5:51 AM EST)

By Mary Mosquera,

WASHINGTON, D.C. -- Consumers will not benefit if the Federal Trade Commission prevails in its antitrust case against Intel, said a senior Intel attorney on Tuesday.

An FTC victory would mean Intel would be forced to turn over its research information to the complaining companies, said Peter Detkin, an Intel vice president and assistant general counsel.

"If the government controls who has access to research and development information, it will reduce the incentive to innovate," he said.

The government said Intel used its monopoly in microprocessors to deny three of its customers and potential competitors access to technical information needed to develop products based on Intel's chips.

"Intel cut off competition and repeatedly used its monopoly power as a club," said William Baer, director of the FTC's bureau of competition, when it initially charged the chip maker in June.

Intel said it was within its rights to withhold data because computer workstation maker Intergraph, Digital Equipment, and Compaq -- which later bought Digital -- filed patent-infringement suits against the Santa Clara, Calif.-based chip maker. The trial begins March 9 and is anticipated to take more than two months.

If the government gets its way, said Intel spokesman Chuck Mulloy, "an unintended side effect is we would be more hesitant to enter business relationships." Over time, that could slow the innovative process, he said.

Detkin said the FTC is sticking to its original narrow case and is not expanding it. Both sides have a long list of potential witnesses, reflecting the broad implications of the case.

To bring new products to market, Intel licenses technology to computer companies that test it and give it back with their technology and guidance on how they can better work together. Cross-licensing is integral to the dynamics of the high-tech industry.

Along with a contract, there is an element of trust, Detkin said. When the three companies sued Intel for infringing on their technologies, trust was eliminated. "They have the right to sue, but we have the right to control who has access to our research and development," he said.

Houston-based Compaq has since bought Digital and negotiated an agreement with Intel. Intergraph's case is still in litigation.

The government will have to prove Intel holds a monopoly in the microprocessor market. The FTC has said the low-end chip market has competitors, but Intel has dominance in the high-end corporate market. "It would be difficult to define how you split the market," Detkin said.

"And high-end prices are dictated by prices at the lower end," said Detkin. Intel is the leading chip manufacturer, but Advanced Micro Devices, National Semiconductor/Cyrix, and IBM are competitors.