The FTC has opened a formal antitrust investigation into Intel's business practices, as revealed by an Intel press release issued Friday in response to a subpoena. Not just Intel, but rival AMD and several PC makers have begun to receive subpoenas from the commission. AMD, which has long complained about Intel's business practices, has not issued a statement yet.
You'll recall that earlier this week South Korea fined Intel $25.4 million over antitrust issues.
Intel's press release said the following:
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.I see a dig at AMD in that last sentence.
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.
The investigation was authorized by William E. Kovacic, the new chairman of the FTC and has the support of the agency’s other commissioners. This was a reversal of a prior decision by Kovacic's predecessor, Deborah P. Majoras.
It should be noted, however, that FTC Chairmen are appointed directly by the President. Coming at the end of Bush's term, this definitely won't be resolved before the elections, sho who knows where the investigation will eventually end up.
Both AMD and Intel were down over 2% in Friday afternoon trading; however, this could be attributed to the poor jobs data released on Friday as well as oil news.