FTC and Intel Reach Tentative Settlement

(March 8, 1999) Lawyers for the Federal Trade Commission and Intel have executed a proposed consent agreement in settlement of the complaint brought last July by the FTC that Intel has violated antitrust law. The administrative trial of the matter had been scheduled to start on Tuesday, March 9. Neither the agreement, nor its contents, were released. The agreement also has yet to be approved by the Commissioners of the FTC.

The Federal Trade Commission filed an administrative complaint against Intel last June which alleged that Intel is a monopoly that illegally refused to deal with computer makers Compaq, Intergraph, and DEC in order to coerce them into surrendering certain intellectual property rights.  The FTC sought a "cease and desist" order.

The lawyers for the FTC and Intel filed a motion on Monday with the James Timony, the Administrative Law Judge presiding in this matter. It stated, in full:

"Complaint counsel and counsel for Respondent, pursuant to Rule 3.25(c) of the Commission's Rules of Practice, move that the above-captioned matter be withdrawn from adjudication for the purpose of considering an executed proposed consent agreement which accompanies this motion. Counsel represent that in their views the agreement is appropriate to settle the issue in this proceeding and that it conforms to the requirements of Rule 2.32 of the Commission's Rules of Practice."

This motion was signed by Richard Parker for the FTC and Joseph Kattan, of the law firm of Gibson Dunn & Crutcher for Intel. FTC Secretary Donald Clark then issued an order on behalf of the Commission: "IT IS ORDERED that the aforesaid motion to withdraw this matter from adjudication be, and its is hereby, granted."

	Craig Barrett

Intel expressed satisfaction. Craig Barrett, President and CEO Intel stated the following in a press release: "We view this compromise agreement as a win-win for both parties and we are satisfied that the agreement gives us value for our intellectual property rights. This is acceptable to both parties and was the result of constructive dialog between Intel and the FTC."

William Baer, Director of the FTC's Bureau of Competition, which has been prosecuting the case, made the following statement in a press release.

"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. There are remaining issues under investigation by the Commission. The Commission's staff is committed to working expeditiously to resolve those concerns."

Intergraph Corporation is one of the primary beneficiaries of this FTC action. It is also the plaintiff in Intergraph v. Intel. Intergraph made the following statement about the proposed settlement:

"We hope that the settlement reached by the FTC and Intel will ensure that Intel changes its behavior to give fair and equal treatment to the companies they do business with, and not cut off those companies from vital product and information that they need in order to compete. We are also hopeful that the settlement will protect the interests of the industry and will ensure fair business practices by Intel in the future. We will continue to pursue our private lawsuit against Intel, which is a much broader case and includes antitrust violations, patent infringement, and illegal coercive behavior. While we have not seen the precise relief the FTC obtained in the decree, this settlement vindicates our antitrust claims and shows that the preliminary injunction in favor of Intergraph granted by Judge Nelson in the federal court of Alabama was based on sound antitrust principles."

Intel, the world's largest chip maker, is also a leading manufacturer of computer, networking and communications products. Intel stock closed up 5 points on Monday at 119 5/8 (up 4.38%). Intergraph was up 1/32 to 5 3/4 (up .55%). AMD was up 1/2 to 18 15/16 (up 2.71%). Compaq was up 1/8 to 34 3/8 (up .36%).

Federal Trade Commission Press Release.
Re: Proposed consent agreement with Intel.
Date: March 8, 1999.
Source: Federal Trade Commission.

FTC Staff and Intel Reach Proposed Settlement of Litigation

Federal Trade Commission lawyers and the Intel Corporation today jointly filed a motion with the Commission's Secretary withdrawing from adjudication the FTC's case against Intel. The parties submitted the motion to allow the Commission time to consider a proposed settlement agreed to this weekend by FTC Complaint Counsel and Intel. Commission charges against Intel were announced on June 8, 1998.

The following is a statement by William J. Baer, Director of the FTC's Bureau of Competition:

"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. There are remaining issues under investigation by the Commission. The Commission's staff is committed to working expeditiously to resolve those concerns."

Under Commission rules a proposed consent agreement accompanied by a motion to withdraw a matter from adjudication stays all proceedings before the Administrative Law Judge so that the Commission can consider the proposed settlement. Complaint Counsel expects to submit the recommended settlement, along with explanatory materials, to the Commission within a matter of days. During Commission review of the proposed settlement, both Commission staff and representatives of Intel are free to meet with Commissioners to discuss the proposed settlement.

According to the rules, the Commission can accept the proposed settlement, reject it and return the matter to litigation, or take such other action as it may deem appropriate. The rules also state that the proposed consent agreement itself shall not be placed on the public record unless and until it is accepted by the Commission.