Sunday, June 8, 2008

Intel subpoenaed by FTC over CPU business practices

Intel subpoenaed by FTC over CPU business practices

Though the US Federal Trade Commission has yet to issue a statement as of 1:30 pm EDT, Intel has acknowledged it has received a subpoena from the FTC, effectively formalizing its inquiry into Intel's US business practices in the CPU market.

Intel received the subpoena on Wednesday, the company said. The subject of that subpoena is not likely to be related to a small fine issued Wednesday by the Korean Fair Trade Commission, as that matter was related to rebates the company gave Korean customers.

The complete text of Intel's statement this morning appears below:

On June 4 the U.S. FTC served a subpoena related to Intel's business practices with respect to competition in the microprocessor market. Since 2006 Intel has been working closely with the FTC on an informal inquiry into competition in the microprocessor market and has provided the commission staff with a considerable amount of information and thousands of documents. By proceeding to a subpoena, the Commission will be able to obtain not only information that Intel has already committed to provide but also information from other parties. Consistent with its standard practice Intel will work cooperatively with the FTC staff to comply with the subpoena and continue providing information.

The company believes its business practices are well within U.S. law. The evidence that this industry is fiercely competitive and working is compelling. For example, prices for microprocessors declined by 42.4 percent from 2000 to end of 2007. When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly.

Not surprisingly, AMD executive vice president Tom McCoy -- whose company has prompted much of this investigation -- released a statement minutes ago: "Intel must now answer to the Federal Trade Commission, which is the appropriate way to determine the impact of Intel practices on US consumers and technology businesses. In every country around the world where Intel's business practices have been investigated, including the decision by South Korea this week, antitrust regulators have taken action."

Last October, Intel acknowledged sharing with the FTC several sets of internal documents, by way of an official denial of reports that the FTC had actually subpoenaed that information. At that time, Intel spokesperson Chuck Mulloy told us his company regularly shares requested information with the Commission, as well as volunteers information it may not even know it needs yet. But Wednesday's subpoena, and Intel's response to it, indicates there was something that was heretofore unshared.

The precise subject matter of what the FTC is seeking has never been publicly stated, and may not be until the FTC issues a statement of its own. That could come later today.

Both Intel and AMD stock took a hit on today's news, on top of bad economic news, dropping in value 3% and 2%, respectively, by 1:30 this afternoon.

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