US Trade watchdog the Federal Trade Commission has ruled against the chipmaker Intel for its anti-competitive antics. The FTC has filed an administrative complaint against Intel, claiming that the chipmaker illegally stifled competition and innovation in the microprocessor market. For the last decade Intel has waged a systematic campaign to shut out rivals from the microprocessor marketplace. As a result the chipmaker deprived electronics buyers of choice and innovation denying consumers to potential superior, lower-priced microprocessors.

Richard Feinstein, director of the FTC's bureau of competition accused Intel of adeliberate campaign to hamstring competitive threats to its monopoly.

"It's been running roughshod over the principles of fair play and the laws protecting competition on the merits," his report said.

Intel carried out its anticompetitive campaign using threats and rewards to computer manufacturers including Dell, Hewlett-Packard and IBM, to coerce them not to buy processors made by Advanced Micro Devices (AMD) and other competitors in the microprocessor market. Intel's tool of choice was a practice called "exclusive" or "restrictive dealing" to prevent computer makers from selling any machines with non-Intel computer chips. Intel fudged key compiler software that deliberately stunted the performance of competitors' chips, according to the FTC. This gave the impression that software performed better on its processors than on competitors'. It did not say this was because of Intel's compiler design.

The FTC is seeking an order which would prevent Intel from using threats, bundled prices or other offers to encourage exclusive deals, hamper competition or unfairly manipulate the prices of its microprocessors and GPU chips. It might also call for an order prohibiting Intel from unreasonably excluding or inhibiting the sale of competitive processors and GPUs, and prohibiting the company from making or distributing products that impair the performance—or apparent performance—of non-Intel chips.

The complaint is so damning and puts Intel in such a difficult situation it is hard to see how it is going to get out of it. In a statement, Intel said the FTC's case was "misguided" and that its complaint "was not based on existing law but is instead intended to make new rules for regulating business conduct. It trotted out the usual argument that not being able to stiff the opposition would harm consumers by reducing innovation and raising prices.

The case is tentatively scheduled to be heard before an administrative law judge on September 15, 2010. It looks like Intel will be forced to negotiate with the FTC and a federal judge and they have to go through this whole process. The chipmaker also faces anticompetitive charges by the New York State Attorney General.