Both Sides Gain In Intel-FTC Antitrust Settlement

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March 08, 1999 (10:19 AM EST)

Both Sides Gain In Intel-FTC Antitrust Settlement

By Mary Mosquera,

WASHINGTON, D.C. -- A proposed settlement between the Federal Trade Commission and Intel has some potential benefits for both sides, said a former FTC senior attorney Monday.

At the same time, the settlement boosted the stock of the giant chip maker, sparking a narrow Nasdaq rally. Intel [INTC] rose 3 5/8 to 118 1/4 in early-afternoon trading.

The proposed settlement between the FTC and Intel eliminates the need for the landmark antitrust trial, which was slated to start on Tuesday here in Washington, D.C.

The FTC said the two sides submitted a motion that the commission study the proposal agreed to this weekend by attorneys for the Santa Clara, Calif.-based chip maker and the federal agency.

"If approved by the commission, the proposed settlement being recommended by complaint counsel and Intel would resolve the allegations contained in the commission's complaint issued on June 8," said William Baer, director of the FTC's Bureau of Competition. The FTC is working expeditiously to resolve issues remaining under investigation, he said.

Neither side would discuss the specific terms of the settlement, but the FTC prevails in asserting companies must conduct business fairly while Intel avoids the cost and public spotlight focused on its practices, said Howard Morse, a partner at Drinker Biddle & Reath, in Washington, D.C., and a former assistant director of the FTC's Bureau of Competition.

Both parties' needs were addressed in the agreement, said Intel spokesman Chuck Mulloy. "We received acknowledgement of the value of our intellectual property," Mulloy said.

"The commission sought to establish a principle, and the staff believes the agreement achieves that goal," said FTC spokeswoman Victoria Streitfeld.

The FTC said Intel used its monopoly in microprocessors to extract new technologies royalty-free from three of its customers and potential competitors and then denied them access to technical information they needed to develop products.

Compaq and Digital Equipment, which Compaq has acquired, and Intergraph filed patent-infringement suits against Intel. Huntsville, Ala.-based Intergraph is still in litigation.

Intel does not deny it withheld data, but has said it has a right to decide with whom it does business.

Announcement of the settlement came just one day before the opening of the second landmark antitrust case in the nation's capital in the past five months. The Microsoft antitrust trial has recessed until mid-April.

"After eight months of trial preparation, an opening for discussion became apparent in the last few months," Mulloy said. "Each side felt there was an opening here for discussion."

It is often in both parties' interest to settle litigation because of uncertainty, said Morse. "The FTC has a principle to vindicate, and, while we don't know the details, it would be difficult for the FTC to reach agreement that did not vindiciate its principle," he said.

"There's also nothing like the deadline of a trial to focus people's attention," Morse said.