Intel agrees to abide by Japanese FTC ruling

TOKYO — Intel’s Japanese subsidiary has agreed to accept recommendations made by the Japan Fair Trade Commission (JFTC) as part of an investigation into Intel’s business practices but the chip maker said it disagrees with the commission’s findings.

Intel KK informed the JFTC on Friday morning that it intends to abide by a number of cease and desist provisions of the recommendation, said Masatoshi Mizuno, a spokesman for Intel’s Japanese unit.

The JFTC published on March 8 the findings of an 11-month investigation into Intel’s Japan unit that found the company had offered rebates or money for marketing activities to five major PC makers on condition that they use Intel processors in all or most of the computers they make. The JFTC didn’t name the PC makers but on the day it began its investigation, officials visited the offices of Sony, Fujitsu, and Toshiba, in addition to those of Intel.

The result of the alleged business behavior, which is against Section 3 of Japan’s Antimonopoly Act, had been to a substantially restrain competition in the market for CPUs sold to the five Japanese PC makers, the JFTC said. The market share enjoyed by Advanced Micro Devices Inc. and Transmeta Corp., which almost totally accounted for all competition in the Japanese market against Intel, dropped drastically from 24 percent in 2002 to 11 percent in 2003.

As a result the JFTC recommended Intel take a number of steps including and end to the practice of promising funds in return for refraining from adopting competitor’s processors. The recommendations allow Intel to continue to offer rebates and funds but only if no conditions are set.

Intel had been given until March 18 to either accept or reject the findings but this was extended until April 1 on Intel’s request. Had Intel not rejected the findings, the company would have faced a series of non-court hearings in which it and the JFTC would have argued their points in front of an expert.

Intel decided to accept the findings despite disagreeing with the JFTC’s facts because it was the easiest route for the company to take while maintaining its basic opposition to the report, said Mizuno.

“Intel does not want its customers or Intel itself to be inconvenienced by being drawn into a lengthy legal process,” he said.

Perhaps not surprisingly, AMD criticized Intel’s refusal to accept the JFTC’s findings.

“It is unfortunate that even when presented with specific — and very disturbing — findings of deliberate and systematic anti-competitive behavior, Intel refuses to face the facts and admit the harm it has caused to competitors and consumers,” the company said in a statement attributed to Thomas M. McCoy, AMD’s executive vice president of legal affairs and chief administrative officer.

However, AMD said Intel’s acceptance of the JFTC recommendations was “a step in the right direction.”

Transmeta could not be immediately reached for comment.