In what certainly cannot be considered a surprise, the FTC filed suit against Intel this morning.  The FTC press release states:

According to the FTC complaint, Intel’s anticompetitive tactics were designed to put the brakes on superior competitive products that threatened its monopoly in the CPU microchip market. Over the last decade, this strategy has succeeded in maintaining the Intel monopoly at the expense of consumers, who have been denied access to potentially superior, non-Intel CPU chips and lower prices, the complaint states.

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The FTC’s administrative complaint charges that Intel carried out its anticompetitive campaign using threats and rewards aimed at the world’s largest computer manufacturers, including Dell, Hewlett-Packard, and IBM, to coerce them not to buy rival computer CPU chips. Intel also used this practice, known as exclusive or restrictive dealing, to prevent computer makers from marketing any machines with non-Intel computer chips.

In addition, allegedly, Intel secretly redesigned key software, known as a compiler, in a way that deliberately stunted the performance of competitors’ CPU chips. Intel told its customers and the public that software performed better on Intel CPUs than on competitors’ CPUs, but the company deceived them by failing to disclose that these differences were due largely or entirely to Intel’s compiler design.

Having succeeded in slowing adoption of competing CPU chips over the past decade until it could catch up to competitors like Advanced Micro Devices, Intel allegedly once again finds itself falling behind the competition – this time in the critical market for graphics processing units, commonly known as GPUs, as well as some other related markets. These products have lessened the need for CPUs, and therefore pose a threat to Intel’s monopoly power.

Intel has responded to this competitive challenge by embarking on a similar anticompetitive strategy, which aims to preserve its CPU monopoly by smothering potential competition from GPU chips such as those made by Nvidia, the FTC complaint charges. As part of this latest campaign, Intel misled and deceived potential competitors in order to protect its monopoly. The complaint alleges that there also is a dangerous probability that Intel’s unfair methods of competition could allow it to extend its monopoly into the GPU chip markets.

According to the FTC’s complaint, Intel’s anticompetitive tactics violate Section 5 of the FTC Act, which is broader than the antitrust laws and prohibits unfair methods of competition, and deceptive acts and practices in commerce. Critically, unlike an antitrust violation, a violation of Section 5 cannot be used to establish liability for plaintiffs to seek triple damages in private litigation against the same defendant. The complaint also alleges that Intel engaged in illegal monopolization, attempted monopolization and monopoly maintenance, also in violation of Section 5 of the FTC Act.

The complaint is here.

Update: Intel has issued a press release:

Intel has competed fairly and lawfully. Its actions have benefitted consumers. The highly competitive microprocessor industry, of which Intel is a key part, has kept innovation robust and prices declining at a faster rate than any other industry. The FTC’s case is misguided. It is based largely on claims that the FTC added at the last minute and has not investigated. In addition, it is explicitly not based on existing law but is instead intended to make new rules for regulating business conduct. These new rules would harm consumers by reducing innovation and raising prices.”

Intel senior vice president and general counsel Doug Melamed added, “This case could have, and should have, been settled. Settlement talks had progressed very far but stalled when the FTC insisted on unprecedented remedies – including the restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint — that would make it impossible for Intel to conduct business.”

“The FTC’s rush to file this case will cost taxpayers tens of millions of dollars to litigate issues that the FTC has not fully investigated. It is the normal practice of antitrust enforcement agencies to investigate the facts before filing suit. The Commission did not do that in this case,” said Melamed.

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The AP reports:

The European Union has dropped long-standing antitrust charges against Microsoft Corp. after the company agreed to give users of the Windows operating system a choice of up to 12 other Web browsers.

Under the terms of the deal with regulators announced Wednesday, Microsoft will avoid further EU fines if it provides a pop-up screen that lets European users – from March – replace Microsoft’s Internet Explorer or add another browser such as Mozilla’s Firefox or Google’s Chrome. Internet Explorer is used by a majority of global internet users.

The deal will also allow computer manufacturers to ship PCs without Internet Explorer in Europe.

The EC press release is here and Microsoft’s statement – and links to several relevant documents – is here.

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According to the NYT, Nicolas Sarkozy said that “[w]e won’t let ourselves be stripped of our heritage to the benefit of a big company, no matter how friendly, big or American it is,” probably referring to the fact that about half of the 12 million books scanned by Google are not in English. How exactly is cultural heritage threatened by increased access? Because hundreds of thousands of links to French language books would be added to the 850,000 entries in the French Wikipedia within weeks? Because more and more people around the world would read, re-read, and incorporate in their own lifes, storytelling, and cultural production French works? Prime Minister Francois Fillon similarly said that France would not accept another cultural industry being “threatened by looting.” So culture is looted by access, use, and relevance? What a profound misunderstaning of what culture is and how it works.

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Google now has a legal search engine.  You first have to go to Google Scholar and then selected the “legal opinions and journals” option.  I have only taken a quick look but a couple of quick thoughts: this is will be useful if you know the case name (or part of it).  However, the inability to search for cases within a particular federal district court or circuit is an odd limitation (especially given the the ability to search for state cases by state).  Other limitations: there is no indication if the case has been overruled, vacated, etc. (nor is there a way to Sherpadize a case) and the search tools are not as powerful as those found on Lexis or Westlaw.  Hopefully, Google will work to improve this search tool.

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Earlier today it was announced that Intel and AMD settled their long running antitrust dispute(s).  Reuters reports:

Intel Corp will pay rival chipmaker Advanced Micro Devices Inc $1.25 billion to settle all outstanding legal disputes ….

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AMD said it will withdraw all its regulatory complaints against Intel. The two companies also sealed a five-year cross-licensing deal and said they would give up any claims of breach from their previous license agreement.

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AMD said it will drop all pending litigation against Intel, including a case in the U.S. District Court in Delaware and two cases pending in Japan.

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Here is a useful article by John Koenig and a nicely done presentation by FaberNovel, discussing the main strategies for making money with open source, namely (1) licensing of complementary products (e.g., a proprietary downstream products or add-ons); (2) the sale of complementary services; and (3) the use of OSS for hosted services (e.g., Google, Salesforce).

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While researching an article regarding the search and seizure of computer hardware and electronic data in criminal antitrust investigations, I noticed a distinct lack of case law.  There is a lot of case law regarding the search and seizure of computer hardware and electronic data in other types of criminal cases.  But I did not find any significant cases involving antitrust investigations.  Putting aside for the moment any speculation as to the reasons for this (whether due to my poor legal research skills or the “low” number of criminal antitrust investigations in the last 10 years), if you are feeling generous and are aware of any such cases, feel free to mention them in the comments or email them to us.

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The Washington Post is reporting that DOJ:

has launched an investigation into whether some of the nation’s largest technology companies violated antitrust laws by negotiating the recruiting and hiring of one another’s employees, according to two sources with knowledge of the review.

The review, which is said to be in its preliminary stages, is focused on the search engine giant Google; its competitor Yahoo; Apple, maker of the popular iPhone; and the biotech firm Genentech, among others, according to the sources, who spoke on condition of anonymity because the investigation is ongoing.

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The sources said the review includes other tech companies and is “industry-wide.” By agreeing not to hire away top talent, the companies could be stifling competition and trying to maintain their market power unfairly, antitrust experts said.

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On Thursday, the FTC formally dismissed its case against Rambus.  The press release, in its entirety, read:

The Federal Trade Commission has formally dismissed the complaint in the Rambus matter. “While we remain disappointed by the decision of the Court of Appeals, we of course respect the Court’s opinion and will move forward,” said Richard A. Feinstein, Director of the Bureau of Competition. “The standard-setting issues that were at the heart of this case remain important, both as a matter of antitrust policy, and in order to protect consumers, and we will remain vigilant in this area.”

That is three whole sentences for those you keeping track at home.

The order, and the other pleadings in the matter, can be found here.

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Reuters, via the New York Times, reports that the European Commission has fined Intel$1.45 billion.

The European Commission fined Intel a record €1.06 billion on Wednesday for abusing its dominance in the computer chip market to exclude its only serious rival, Advanced Micro Devices.

The European Union’s competition commissioner, Neelie Kroes, said the penalty against Intel, the equivalent of $1.45 billion, was justified because the company had skewed competition and denied consumers a choice for chips.

Ms. Kroes said Intel had “used illegal anticompetitive practices to exclude its only competitor and reduce consumers’ choice — and the whole story is about consumers. ” She said Intel’s practices had “undermined innovation.”

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Paul Otellini, chief executive of Intel, said the company would appeal.

“We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace,” Mr. Otellini said. “There has been absolutely zero harm to consumers.”

Giuliano Meroni, president of A.M.D.’s operations in Europe, said the decision would “shift the power from an abusive monopolist to computer makers, retailers and above all PC consumers.”

Ms. Kroes said Intel had pursued a strategy aimed mainly at excluding A.M.D. by paying computer makers and retailers to postpone, cancel or avoid A.M.D. products entirely.

The European Commission, which is the E.U.’s executive arm, also found that Intel “went to great lengths to cover up its anticompetitive actions,” Ms. Kroes added.

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The AmLaw Daily reports:

Google Inc. and Yahoo! Inc. called off their joint advertising agreement just three hours before the Department of Justice planned to file antitrust charges to block the pact, according to the lawyer who would have been lead counsel for the government.  Sanford “Sandy” Litvack (right) left Hogan & Hartson in September to consult for the department’s antitrust division on a possible court challenge to the Web giants’ agreement. The companies abandoned the deal in November after the Justice Department informed them it would seek to block the deal. “We were going to file the complaint at a certain time during the day,” says Litvack, who rejoins Hogan & Hartson today. “We told them we were going to file the complaint at that time of day. Three hours before, they told us they were abandoning the agreement.”

You can read the entire article here.

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The AP (via the New York Times) reports:

Google Inc. and Yahoo Inc. have scrapped their Internet advertising partnership, abandoning attempts to overcome the objections of antitrust regulators and customers who believed the alliance would give Google too much power over online commerce.

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The Justice Department signaled it was considering a legal challenge to the deal in September when it hired veteran antitrust lawyer Sanford Litvack to review the case.

The Wall Street Journal reported Monday that Google and Yahoo had proposed restrictions on the deal — capping the amount of search ads Yahoo could outsource to Google — in a late bid to win favor. Google’s statement Wednesday indicated the idea didn’t fly.

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Too often we focus on noisy conflicts, but sometimes the dog that does not bark is just as important (especially for practicing attorneys).  Yesterday, the U.S. Department of Justice announced that it would not challenge a “proposal by a consortium of companies to jointly license patents needed to comply with standards for ultra high frequency radio frequency identification (UHF RFID) technology ….”  PC World reports:

Last November, consortium members — 3M, France Telecom, Hewlett-Packard, LG Electronics, Motorola, ThingMagic and Zebra Technologies — formed a limited liability partnership to jointly license their RFID-related patents using “reasonable and nondiscriminatory terms,” the DOJ said. The companies requested the DOJ conduct a business review to determine that the partnership didn’t break any U.S. antitrust laws.

Under the consortium plan, an independent licensing agent will offer nonexclusive licenses to other companies interested in adopting RFID.

The patents address a UHF RFID standard endorsed in 2006 by the International Organization for Standardization (ISO). The so-called Generation-2 standard was originally created by EPCglobal, a private RFID standards group.

DOJ’s letter (with all 50 footnotes) is available online, as the press release.

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As previosuly noted, the New York Rangers (i.e., Madison Square Garens, the Rangers’ owner) sued the N.H.L. which was mostly related to control over the Ranger’s website.  The ranger’s motion for a preliminary inunction was denied.  On Friday, the district court – Judge Preska – granted the NHL’s motion to dismiss as to the parts of the complaint that did not relate to the website dispute, but denied it as to the website (or “New Media”) issue.

The Sports Law Blog provides the analysis of the key antitrust issue: 

Judge Preska therefore had to determine if the single entity defense barred MSG’s New Media Strategy Section 1 antitrust claims.  Although Judge Preska recognized that “[w]hat is essentially the same [single entity] argument has been rejected in a similar case by the Court of Appeals,” and that “[m]ost other Courts that have taken up the issue have reached the same conclusion,” Judge Preska concluded that the “Court need not—and will not—resolve the question at this juncture [because] the arguments advanced by the NHL in favor of single entity status require examining facts outside the pleadings.”  In particular, Judge Preska noted that “there is no evidence in the record on the crucial question of market definition, let alone the inquiry into how the NHL actually operates as an economic actor in that market,” and “therefore the NHL’s arguments in favor of dismissal cannot be resolved at the pleading stage.”

Here is the opinion: madison-square-gardens-l1p-v-national-hockey-league.pdf.

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A couple of weeks ago, we passed along a report that several upstream internet service providers (ISPs) ”shunned” Atrivo, a downstream ISP.  The Washington Post’s Security Fix blog reports today that there was a “short-lived but precipitous decline in the level of badness online after Atrivo was shut down …”

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