The FTC also alleged that Intel may have redesigned its software to degrade the performance of rival chips.

The FTC complaint alleges that Intel has deprived consumers of choice and innovation in microprocessors through a systematic campaign to shut out competing chips—such as those from rival AMD.

Intel (Santa Clara, Calif.) issued a statement in response to the FTC's complaint, saying that the company has competed fairly and lawfully and that its actions have benefited consumers. Intel further said the FTC's case is misguided and based largely on claims that the FTC added at the last minute and has not investigated. The complaint is not based on existing law but is instead intended to make new rules for regulating business conduct, Intel said.

"Intel has engaged in a deliberate campaign to hamstring competitive threats to its monopoly," said Richard A. Feinstein, director of the FTC's Bureau of Competition, in a statement. "It's been running roughshod over the principles of fair play and the laws protecting competition on the merits."

Intel has been charged with anticompetitive behavior by other governments. The company continues to appeal a record $1.58 billion fine levied by the European Commission in May. Last month, New York's attorney general filed a federal antitrust lawsuit against Intel, alleging that the company had violated state and federal anti-monopoly laws. Intel also agreed last month to pay AMD $1.25 billion to settle long-running antitrust litigation and patent disputes between the two companies.

The FTC's complaint also charges that Intel carried out an anticompetitive campaign using threats and rewards to prevent computer makers from marketing any machines with non-Intel computer chips.

In addition, the agency alleged that Intel secretly redesigned its compiler software in a way that deliberately stunted the performance of competitors' CPU chips. Intel told its customers that software performed better on Intel CPUs than on competitors' CPUs, but the company failed to disclose that the differences were due largely or entirely to Intel's compiler design, according to the FTC.

The FTC also accused Intel of applying similar anticompetitive methods to the graphics processing unit (GPU) market, which have lessened the need for CPUs, and therefore pose a threat to Intel's monopoly power. The company has embarked on a strategy to smother potential competition from GPU chips such as those made by Nvidia Corp., the FTC complaint charges.

The complaint alleges that there is also a "dangerous probability that Intel's unfair methods of competition could allow it to extend its monopoly into the GPU chip markets."

Intel's statement quoted Doug Melamed, Intel senior vice president and general counsel, saying settlement talks between Intel and the FTC had progressed very far but stalled when the FTC insisted on unprecedented remedies, including restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint. These conditions would make it impossible for Intel to conduct business, Melamed said.

"This case could have, and should have, been settled," Melamed said.

Melamed said the FTC's "rush to file this case will cost taxpayers tens of millions of dollars to litigate issues that the FTC has not fully investigated." He said it is normal practice for antitrust enforcement agencies to investigate the facts before filing suit, but that the FTC did not in this case.

According to the FTC's complaint, Intel's anticompetitive tactics violate Section 5 of the FTC Act, which is broader than the antitrust laws and prohibits unfair methods of competition, and deceptive acts and practices in commerce.

Unlike an antitrust violation, a violation of Section 5 cannot be used to establish liability for plaintiffs to seek triple damages in private litigation against the same defendant.

The FTC vote 3-0 to approve the administrative complaint against Intel. An administrative hearing on this matter is tentatively scheduled before an FTC administrative law judge on Sept. 15, 2010.

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