This could be Intel's Waterloo

NEW YORK (Fortune) -- While today's Federal Trade Commission action against semiconductor giant Intel recycles some now familiar charges -- abuses of monopoly power that were the subject of suits previously filed against the company by rival AMD and regulators with the European Commission, Japan, Korea, and the New York State Attorney General's office -- it also advances new factual allegations and enlists some fresh and untested legal theories into the fray.

The suit relies principally on Section 5 of the Federal Trade Commission Act, which gives the FTC broad powers to regulate "unfair methods of competition." While Section 5 can be used to address conduct that would constitute antitrust violations, it can also reach a wide variety of lesser misconduct. Unlike the antitrust laws -- which can form the basis for private, treble-damages suits --section 5 can be invoked only by the FTC, and only to seek injunctive relief.

During a conference call conducted shortly after the charges were unveiled, Intel's general counsel Douglas Melamed called the FTC's charges "misguided and unwarranted." He asserted that Intel (INTC, Fortune 500) "has not violated the law" and accused the commission of disregarding "decades of guidance" from courts in antitrust cases in an effort to devise "new rules for regulating and micromanaging business conduct."

Those who favor tougher enforcement of competition laws than we have seen in recent years, on the other hand, are jubilant. "The FTC should be congratulated for using Section 5 in a thoughtful and effective fashion," says David Balto, a former FTC policy director who is now with the Center for American Progress. "For too long Section 5 has been delegated to the dustbin of enforcement tools. Its use in this case will make the FTC the tough enforcement cop Congress wanted to to be."

The previous suits against Intel have all focused on the company's conduct in the market for so-called x86 microprocessors, which constitute the "brains" of almost all personal computers, laptops, and server computers. The central allegation there was that, in 2003, when Intel temporarily fell behind AMD (AMD, Fortune 500) in technological quality, it artificially kept AMD from gaining market share by, essentially, paying computer makers not to use AMD chips regardless of their customers' preferences.

The main tool Intel was said to have used for this purpose were "loyalty rebates" -- large, end-of-quarter payments Intel allegedly made to computer makers conditioned upon their having purchased exclusively Intel chips that quarter or, at least, having limited their AMD purchases to very low shares of unfavored market segments.

(Intel has always maintained that it has never used loyalty rebates, but it paid $1.25 billion last month to settle AMD's civil suit, and it has lost earlier regulatory actions brought by Japan, Korea, and the European Commission, with the last fining it a record $1.46 billion in May. Intel settled the Japan case, and is still appealing the EC and Korean judgments.)

Today's administrative action, which is set to be tried by an administrative law judge in Washington, D.C., just nine months from now, reiterates some of the loyalty-rebate charges, but also levels new accusations relating to the burgeoning market for graphics processing units (GPUs), both in traditional PCs and the newer, lighterweight netbooks. The FTC alleges that Intel is illegally trying to monopolize this market, in which it already has a 50% share; the remainder is split mainly between Nvidia (NVID) and ATI, an AMD subsidiary. Since Intel currently "lags behind its competitors in both quality and innovation" in the GPU market, according to the FTC, it has been resorting to below-cost pricing strategies to coerce computer makers into buying them.

The FTC also accuses Intel of playing dirty pool in a wide variety of ways. It allegedly distributed software products, for instance, that were intentionally designed to slow the performance of non-Intel CPU chips, while offering no "sufficiently justifiable technological benefit." Intel then made "false and misleading" statements to computer makers, independent software vendors, and "benchmarking organizations" -- i.e., outside groups who measure the speed at which competing chips perform various operations -- that failed to disclose that the Intel software was artificially gumming up the performance of non-Intel chips.

Finally, the FTC also alleges that Intel awarded computer makers who agreed to buy exclusively from Intel with "a slush fund worth hundreds of millions of dollars to be used in bidding competitions against [computer-makers] that offered non-Intel-based computers." A similar accusation had been made by the European Commission in its original charges against Intel, but was omitted from its final findings against the company.