Success breeds success. And lawsuits. If you’re Intel Corp. (NASDAQ: INTC), lots of lawsuits both from competitors and regulators. In the past several months, the chip-making behemoth has settled two suits, one a private antitrust suit from competitor Advanced Micro Devices Inc. (NYSE: AMD) for $1.25 billion and a second from the European Union for $1.45 billion.
The company is scheduled to go to trial in September on a suit brought by the US Federal Trade Commission, and in an effort to head off a trial that could reveal the company’s dealings with customers like Hewlett-Packard Co. (NYSE: HPQ), Dell Inc. (NASDAQ: DELL), and IBM Corp. (NYSE: IBM), Intel and FTC lawyers have entered a proposed consent decree to suspend the proceedings while the full commission reviews the deal. None of the agreements terms have been released.
Intel faces a number of legal proceedings for its alleged monopolistic tactics in the microprocessor market. The company is charged with offering illegal rebates to computer makers in exchange for an agreement to use Intel chips exclusively.
But the worst part of the the action initiated by the FTC would require Intel to license its terms to competitors on terms set by the FTC. Anyway you look at it, that seems to be a little much.
Should the FTC prevail in this instance, the federal government would suddenly find itself in the awkward position of managing several companies at once and even picking the winner. That is not something the feds have ever really proven that they’re good at.
While we don’t know what Intel and the FTC have included in the proposed consent decree, it’s a virtual certainty that this provision is not there. Intel would simply not give up on this issue because it would severely interfere with its independence. And is there anyone out there who really things the current Supreme Court of the US would let such a rule stand if Intel sued?
A more likely outcome from the proposed consent decree is that Intel will agree to pay a significant fine and alter some of its business practices. The company has been through this before and will undoubtedly go through it again.
It won’t concede control of either its technology or its revenue stream, now or ever. It doesn’t have to, and it shouldn’t.