FTC scrutinizes Intel
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January 9, 1998: 3:15 p.m. ET
Settlement between DEC and Intel has raised antitrust concerns at FTC
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NEW YORK (CNNfn) - Intel Corp. on Friday denied its $700 million settlement of a patent infringement suit filed by rival Digital Equipment was in jeopardy because of a Federal Trade Commission probe.
A report in the Los Angeles Times said that the FTC's staff was concerned that the settlement will allow Intel, which already controls 80 percent of the microprocessor market, to extend its dominance even further.
Intel spokesman Chuck Mulloy told CNNfn that "we have not seen any indication one way or the other" that the settlement would not get a thumbs-up from regulators.
He added that Intel "continues to be optimistic that it will receive FTC approval."
Digital filed a suit against Intel last spring, alleging that Intel illegally used some of Digital's technology in developing its Pentium microprocessor brand.
The settlement that was eventually reached required Intel (INTC) to pay licensing fees to Digital (DEC).
Intel also acquired some of Digital's chip-making facilities with the promise that it would continue to make Digital's Alpha chip for seven more years.
The Times said that the FTC is worried that after those seven years, Intel could stop making the Alpha chip, one of the few chips considered capable of grabbing some of Intel's shares. After that, it could use Digital's quality facilities to make even better Intel chips.
Intel admitted that the FTC had approached the company with a second round of questions but Intel said that was not unusual when it is making a major acquisition.
The six-month old investigation is not expected to be completed until later in 1998. The FTC may end up approving the settlement anyway. Another FTC staff investigation recommendation in the early part of the decade, involving Microsoft, was rejected.
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