An Antitrust Analysis of the Federal Trade Commission’s Complaint Against Intel
Joshua D. Wright
Federal Trade Commission; George Mason University School of Law
June 14, 2010
George Mason Law & Economics Research Paper No. 10-27
ICLE Antitrust and Competition Policy White Paper Series, June 8, 2010
The Federal Trade Commission’s recent complaint targets the Intel Corporation for antitrust scrutiny under Section 5 of the Federal Trade Commission Act and Section 2 of the Sherman Act. The Commission alleges that, through the use of loyalty discounts offered to microprocessor purchasers, Intel unlawfully excluded rivals and harmed consumers in the microprocessor and graphics processor markets. This article analyzes the Commission’s claims. The Commission’s reliance on Section 5 should be viewed with suspicion because it allows the Commission to evade the more stringent standards of proof that have been emerged in the Supreme Court’s Section 2 jurisprudence. Furthermore, the Commission’s actions surrounding its prosecution of Intel reflect an adversarial attitude that undermines the Commission’s stated comparative advantages over private litigants. Moreover, the Commission’s allegations form a weak case when evaluated under the conventional Section 2 standard. Unlike many Section 2 cases alleging speculative future consumer harm, the disputed conduct in this case has been in the marketplace for nearly a decade, and its competitive footprint is readily observable. The available data do not support the Commission’s theory that Intel’s behavior harmed consumers. To the contrary, it is almost certain that Intel’s distribution contracts led to tangible, demonstrable consumer welfare gains in the form of lower prices. Accordingly, the Commission’s complaint against Intel threatens to harm consumers directly in the computer industry as well as indirectly by undermining the stability and certainly which longstanding Section 2 jurisprudence has afforded the business community by requiring the plaintiffs offer rigorous proof of competitive harm.
Number of Pages in PDF File: 30
Keywords: AMD, Brooke Group, CPU, Credit Suisse, error-cost framework, European Union, exclusive dealing, FTC, Frank Easterbrook, Kovacic, Linkline Communications, market share, monopolization, original equipment manufacturers, share-based discounts, Stephen Breyer, Supreme Court, Trinko, unfair competition
JEL Classification: D11, D18, F13, K21, L41
Date posted: June 14, 2010
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