Intel's response today to the record $1.45 billion fine (for anti-competitive behavior) is likely to get a warm reception in U.S. courts, lawyers familiar with the case said. And some said that has U.S. authorities rethinking their approach.
The EU imposed the fine-more than twice the previous record $655 million it levied against Microsoft in 2004-after finding the world's leading chipmaker paid illegal rebates to computer makers to limit the amount of products they made that used the chips of Intel rival Advanced Micro Devices. In addition, the EU regulator said Intel made illegal payments to computer makers to delay or even cancel AMD-powered products.
But Intel CEO Paul Otellini said in a statement on Wednesday that the company would appeal the decision because "there's been absolutely no harm to consumers."
That defense may not get much of a hearing in the EU's court of appeals. It could stand the company in good stead in the U.S., however, according to the attorneys.
Nonetheless, they expect the Federal Trade Commission or the Department of Justice to go after Intel now that the Obama administration has announced its intention to crack down on anti-competitive behavior by individual companies.
However, "the DoJ and the FTC have their work cut out for them" when it comes to pursuing such action in the courts, said Carl Hittinger, a partner in the Philadelphia office of DLA Piper.
Hittinger cited two recent decisions by the U.S. Supreme Court—its ruling in 2004 against lawyer Curtis Trinko's claim against Verizon and its rejection last February of Pacific Bell's case against LinkLine Communications—as evidence that the government would have difficulty pursuing claims under Section 2 of the Sherman Act. That section applies to so-called "single-firm" action. In those cases, the court ruled that the plaintiffs had failed to show that they had suffered any harm.
In general, Hittinger said those charging anti-trust violations must show that a company's conduct involved pricing below its competitor's cost and that it couldn't recoup the difference in a reasonable amount of time. "Anti-competitive behavior is not just about lower prices," he said.
Hittinger conceded that FTC chairman Jon Leibowitz has signaled that he intends to challenge that view. "He thinks the courts have drunk the Chicago-school Kool Aid" when it comes to Section 2.
Nonetheless, Hittinger predicted that Liebowitz would face a "battle royale" in the Supreme Court.
That may explain why the FTC is reportedly considering going after Intel under the FTC Act instead of the Sherman Act. Section 5 of the FTC Act simply forbids unfair methods of competition.
"A number of current commissioners are interested in expanding the scope of Section 5," Michael Salinger, former director of the agency's bureau of economics, told Reuters.
"What's likely to occur with the FTC, is that they will use the Intel case to explore the reach of the FTC Act."
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