FTC’s Dumb Move Against Intel

by on December 17, 2009 · 9 comments

So the Federal Trade Commission filed a lawsuit against Intel yesterday charging the company with violations of Sect. 5 of the FTC Act (unfair or deceptive trade practices).  What you may have missed yesterday, however, is the rather ironically timed announcement from the Obama administration that it is launching new policies to spur more manufacturing it the United States.  In a statement, Vice President Biden said:

“We need legal, tax and regulatory regimes that promote American manufacturing and do not place an undue burden on those who wish to manufacture products in America.”

Over at the ACT blog, Mark Blafkin writes why this is ironic:

Intel is one of the last great American manufacturers. While Intel does some manufacturing abroad, the vast majority of its chips are built by its 40,000 American workers.  Most of Intel’s fabrication facilities are in the United States, including Arizona, California, Colorado, Massachusetts and Oregon, and the company has announced that it will spend $7 billion to build more facilities here.

The FTC filed its case on behalf of AMD and Nvidia, two companies who have decided to offshore nearly ALL of their manufacturing. AMD’s most advanced manufacturing facility is in Germany, and is “more of a German government fab than an AMD fab” after the German government invested more than $1.5 billion to build it.

When the European Competition Commissioner decided that Intel abused European antitrust law, she crowed that Intel should change its tagline from “Sponsors of Tomorrow” to “Sponsors of the European Taxpayer.” One would hope that the American government would not have similar designs on taking down a company that provides so many high paying American jobs.

  • funkdr

    This opinion piece is very sad. It's quite obvious that the writer does not have more than a rudimentary understanding of economics. Allowing this action also shows other businesses that it is ok to break the law, as long as you don't get caught. This is what leads to price fixing which hurts the consumer far more in the end. For examples of price fixing, look at recent rulings against LCD makers or memory chip makers.

    Intel broke anti-trust laws. Simple as that. It does not matter that they manufacture in the US because that's not relevant. What IS relevant is that Intel paid HP, Dell and other OEM computer makers to NOT use AMD chips, to use new AMD chips weeks after they got them and to not increase their usage of AMD chips despite customer request.

  • fishbane

    So, your dedication to U.S. American jobs is… admirable, or something, but do you have an opinion on whether or not Intel in fact broke Section 5?

    And is it your contention that, even if they did, they should get a pass on it because of all those jobs? I hope not, because that could hardly be considered to be a principled stance.

  • Ryan Radia

    If Intel is found guilty of having violated Section 5 of the FTC Act, that only goes to show that antitrust laws in the U.S. are fundamentally flawed. In a vibrant market setting — and the computer CPU chip market is arguably quite vibrant — then why shouldn't Intel's practices be properly viewed as legitimate, pro-competitive behaviors?

  • Bob

    Because there is the rule of law. If Intel broke the law, then they sure suffer the consequences. Even if the market is “vibrant”, or even if it looses American jobs (politics is not the rule of law), the law needs to be respected. Otherwise you end up like Iraq or something. If you don't like the law, then try to get it changed.

  • fishbane

    So, your dedication to U.S. American jobs is… admirable, or something, but do you have an opinion on whether or not Intel in fact broke Section 5?

    And is it your contention that, even if they did, they should get a pass on it because of all those jobs? I hope not, because that could hardly be considered to be a principled stance.

  • Ryan Radia

    If Intel is found guilty of having violated Section 5 of the FTC Act, that only goes to show that antitrust laws in the U.S. are fundamentally flawed. In a vibrant market setting — and the computer CPU chip market is arguably quite vibrant — then why shouldn't Intel's practices be properly viewed as legitimate, pro-competitive behaviors?

  • Bob

    Because there is the rule of law. If Intel broke the law, then they sure suffer the consequences. Even if the market is “vibrant”, or even if it looses American jobs (politics is not the rule of law), the law needs to be respected. Otherwise you end up like Iraq or something. If you don't like the law, then try to get it changed.

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