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FTC Suit Against Intel Misguided and Uninformed

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FTC Suit Against Intel Misguided and Uninformed

Antitrust Lawsuit Threatens Innovation, Consumers

WASHINGTON, D.C., December 16, 2009―Today the Federal
Trade Commission filed a federal antitrust
lawsuit
against Intel Corporation. The suit, which accuses Intel of
violating Section 5 of the Federal Trade Commission Act of 1914, comes on the
heels of a separate
antitrust lawsuit
filed against Intel last month by New York Attorney
General Andrew Cuomo.

Technology analysts at the Competitive Enterprise Institute, a Washington,
D.C.-based public interest group, questioned whether the FTC’s action is
actually about protecting consumer welfare.

“This lawsuit may succeed at grabbing headlines, but it
won’t benefit consumers one bit,” declared Ryan Radia, Associate Director of
Technology Studies. “There is not one iota of evidence that Intel’s
maligned actions have actually harmed consumers or delayed processor innovation.
In reality, computer chips have gotten faster, cheaper, and more efficient every
year for the past two decades. This baseless intervention in the marketplace
will only delay further innovation in the microprocessor
market.”

“The Commission mistakenly equates Intel’s market share
with market power. In fact, Intel has managed to sustain its market share over
time only because it has continued to innovate aggressively and compete with
archrival AMD to bring better processors to the market. This dynamic state of
affairs has benefited consumers immensely. Spending millions of taxpayer dollars
intervening in a well-functioning market is an enormous waste,” Radia
observed.

“The FTC suit is just the latest illustration of how
antitrust laws are often hijacked by regulators and used to promote a government
industrial policy. Struggling competitors turn to Washington or Brussels to get ahead, and regulators are all
too willing to get involved in the name of ‘consumer welfare,’” Radia
stated.

“Intel’s allegedly illegal business practices are
properly viewed as legitimate, pro-consumer business practices in the vibrant
market setting we see today,” said Wayne Crews, Vice President
for Policy. “Intel is disciplined not only by aggressive competitors
but by downstream business customers like Dell and HP, impatient capital markets
and consumers. Ironically, the primary barrier to computer makers ganging up
against Intel, should they truly need to, is antitrust law itself.”

“Abusive monopoly power is supposed to result in a
reduction of quantity and an increase in prices,” said Crews. “Yet the opposite
phenomenon has occurred in the processor marketplace. In the dynamic high tech
sector, firms can sustain market share only through perpetual innovation. The
sad fact is antitrust laws steer markets in unnatural directions, thwarting the
evolution of commerce and creating instabilities in entire
sectors.”

 
CEI is a non-profit,
non-partisan public interest group that studies the intersection of regulation,
risk, and markets.  For more information about CEI, please visit our website at
www.cei.org.