Intel Dodges Antitrust Charges Because It Sells Hardware

Intel Corporation (NASDAQ: INTC) is either lucky or good. It managed to walk away from FTC monopoly charges with barely a hand slap. The FTC cannot levy fines, so it will simply set up rules to govern the large chip company’s marketing.

The FTC case was built on years-long efforts by Intel to crush the fortunes of smaller competitor AMD (NYSE: AMD).

While the US has not hit Intel with any monetary charges, it was fined about $1.5 billion on similar charges by the EC and paid more fines to South Korean authorities. Intel has also paid settlement money to AMD.

Intel appears to have stayed clear of  a monopoly quagmire that pulled Microsoft (NYSE: MSFT) into prolonged legal fights in both the US and Europe. Google is viewed as the next large American tech firm that could face anti-competitive practices due to its dominance in the search engine market.

It may be that hardware monopoly issues are easier to address than software ones. Intel can change its practices because chip manufacturing, marketing, and distribution are easy to track. Software which is installed in PCs or is accessed over the internet is harder to measure. Microsoft’s Windows operating system ties in a huge number of its applications which are  hard to separate from one another. Google is available to billions of people around the world by simply typing its URL into a computer or mobile devices.

The Intel case may swing on the simplest of remedies. Don’t make chips that carry below market prices, and don’t ship those chips to places that can take advantage of price breaks to unfairly put Intel’s rival in financial jeopardy. It is an elegant solution that stems from the dynamics of the industry.

Douglas A McIntyre