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FTC Proposes Changes to Update and Improve Credit Reporting Notices

The Federal Trade Commission is proposing revisions to the notices that consumer reporting agencies provide to consumers, and to users and furnishers of credit report information under the Fair Credit Reporting Act (FCRA). The FCRA requires the FTC to publish model notices for several forms that must be provided by consumer reporting agencies. The proposed changes are designed to reflect new rules that the FTC and other financial regulators have enacted under the Fair and Accurate Credit Transactions Act of 2003, and to make the notices more useful and easier to understand.

In addition to revising the general Summary of Rights notice, which informs consumers about their FCRA rights, such as how to obtain a free credit report and dispute inaccurate information in credit reports, the FTC also is proposing improvements to the notices that credit reporting agencies provide to users and furnishers of credit report information. The User Notice and Furnisher Notice inform users and furnishers of their obligation to provide certain protections to consumers. The model notices were originally issued in 1997 and revised in 2004. The FTC is accepting public comments on the proposed changes until September 21, 2010. The Commission vote authorizing the Federal Register notice was 5-0. (The staff contact is Pavneet Singh, Bureau of Consumer Protection, 202-326-2252.)

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

FTC Order Protects Consumers in U.S. Market for Eye Care Drug Used in Cataract Surgery

Novartis AG will be required to sell an injectable eye care drug used in cataract surgery as part of a settlement which resolves Federal Trade Commission charges that Novartis’s proposed acquisition of Alcon, Inc., would be anticompetitive. Novartis and Alcon are the only two U.S. providers of the class of drugs known as injectable miotics, and the FTC alleges that the acquisition would have created a monopoly in injectable miotics. The settlement requires Novartis to sell its drug Miochol-E to Bausch & Lomb, Inc.

Injectable miotics are a class of prescription drugs used to induce miosis, or constriction of the pupil. Primarily surgeons use miotics during cataract surgery to shrink the pupil, which helps them determine whether a rupture has occurred in the eye. The only two miotics products in the market are Miochol-E, owned by Novartis, and Miostat, owned by Alcon. U.S. sales of injectable miotics totaled $12.4 million in 2009, and Novartis and Alcon have shares of 67 percent and 33 percent respectively.

According to the FTC’s complaint, Novartis’s acquisition of Alcon would harm consumers, who have in the past benefitted from the direct competition between Novartis and Alcon. If Novartis were allowed to purchase Miochol-E consumers of injectable miotics likely would face higher prices, according to the FTC.

To preserve competition, the settlement requires Novartis to sell the rights and assets related to Miochol-E to Bausch & Lomb (B&L) within 10 days of when the acquisition is consummated. The FTC believes B&L, which is a major international eye-health company, is well-positioned to manufacture and market Miochol-E and compete effectively against Novartis.

Also under the settlement order, Novartis must provide transitional services to ensure that the divestiture to B&L is successful and must transfer its third-party manufacturing arrangements for Miochol-E to B&L as part of the sale. Novartis also must provide technical assistance to help B&L implement procedures to other parts of the manufacturing process. The FTC has appointed Karl L. Hoffman of Rondaxe Pharma to oversee the transfer of the assets to B&L and ensure that Novartis complies with the terms of the order.

The FTC vote approving the complaint and proposed settlement order was 4-0-1, with Commissioner William E. Kovacic recused. The order will be subject to public comment for 30 days, until September 16, 2010, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://ftcpublic.commentworks.com/ftc/novartis.

International Cooperation

During the FTC’s investigation, staff communicated and cooperated with enforcement counterparts in Australia, Canada, Mexico, and the European Commission (EC) that also reviewed this proposed transaction. This cooperation was conducted pursuant to the respective bilateral cooperation agreements with these jurisdictions and, in the case of the EC, the 2002 Best Practices on Cooperation in Merger Investigations.

NOTE: The Commission issues a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The issuance of a complaint is not a finding or ruling that the respondent has violated the law. A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

Copies of the complaint, consent order, and an analysis to aid in public comment can be found on the FTC’s website at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 101-0068)
(Novartis.final.wpd)

Commission Proposes Changes to Improve Premerger Notification Form; Commission Approves Carilion Clinics Application to Sell the Center for Advanced Imaging to InSight Health Corp.

Commission Proposes Changes to Improve Premerger Notification Form

The Federal Trade Commission is proposing to modify the form that companies must file when seeking FTC or Department of Justice review of a proposed transaction under the Hart-Scott-Rodino Act. Companies must notify the agencies when their transactions meet the HSR filing thresholds. The form, which both agencies use, provides basic background information on the premerger filing process.

The agency is seeking public comments on changes designed to streamline the form and focus on the information most needed by the agencies in their initial merger review. The proposal, to be published in the Federal Register, eliminates requests for unnecessary information. The new form, however, will require additional information that is needed to help the FTC and DOJ during their initial review of transactions. The FTC also believes the proposed changes will make the premerger notification process more efficient and will make the form easier to complete.

In addition to changes in the form, the proposal includes minor changes to the HSR Rules to address omissions from the Commission’s 2005 rulemaking involving unincorporated entities. Public comments on the proposed changes will be accepted until October 18, 2010.

The FTC vote approving the Federal Register notice was 5-0. It will be published shortly and is available now on the agency’s website as a link to this press release at www.ftc.gov/os/2010/08/100812hsrfrn.pdf. (FTC File No. P989316; the staff contact is Robert L. Jones, Bureau of Competition, 202-326-2740.)

Commission Approves Carilion Clinic’s Application to Sell the Center for Advanced Imaging to InSight Health Corp.

The Federal Trade Commission has approved Carilion Clinic’s divestiture of the Center for Advanced Imaging to InSight Health Corp. The divestiture restores competition for medical imaging in Roanoke, Virginia, that the FTC alleged was lost when Carilion acquired the Center for Advanced Imaging in 2008. Under a December 2009 settlement with the FTC, Carilion must divest a medical imaging center and an outpatient surgical center in Roanoke to FTC-approved buyers. The settlement resolves charges that Carilion’s acquisitions of the centers were illegal and anticompetitive. Carilion previously requested, and the FTC approved, the sale of one of the clinics – the Center for Surgical Excellence – to Fairlawn Surgery Center, LLC to satisfy, in part, its requirements under the Order.

The FTC vote approving Carilion’s application was 5-0. (FTC Docket No. C-9338; the staff contact is Roberta S. Baruch, Bureau of Competition, 202-326-2861; see press release dated October 7, 2009, at http://www.ftc.gov/opa/2009/10/carilion.shtm.)

Copies of the documents mentioned in this release are available from the FTC’s website at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 32.2010.wpd)

FTC Testifies About Ongoing Efforts to Protect Consumers from Deceptive Debt Relief Scams

The Federal Trade Commission today told the U.S. Senate Committee on Commerce, Science, and Transportation that the FTC has made it a top priority to protect financially distressed American consumers from deceptive debt relief schemes.

With Americans continuing to feel the effects of the economic downturn, the FTC has stepped up efforts to stop fraudulent financial schemes that exploit consumers, according to the testimony, which was presented by Alice Saker Hrdy, Assistant Director in the FTC’s Division of Financial Practices. Hrdy described the FTC’s law enforcement actions in this area, a new FTC rule to combat deceptive and abusive telemarketing of debt relief services, and the FTC’s ongoing work to educate consumers about debt relief options and how to avoid scams.

In the past seven years, the FTC has brought 23 lawsuits against credit counseling firms that are sham nonprofits, debt settlement services, and debt negotiators. These cases have helped more than 500,000 consumers who have been harmed, and additional investigations are under way. The FTC works closely with state attorneys general and state banking departments to leverage its resources to protect consumers in this and other areas.

The testimony also described how the FTC recently amended its Telemarketing Sales Rule to further combat deceptive and abusive debt relief practices. The Rule now prohibits for-profit companies that sell debt relief services over the telephone from collecting fees before delivering the services they promise. In addition, the Rule requires telemarketers to make certain disclosures and prohibits them from making false claims.

In addition, the testimony described the FTC’s many educational campaigns to help consumers manage their finances, avoid deceptive and unfair practices, and be aware of emerging scams, including a major initiative regarding mortgage loan modification and foreclosure rescue scams. The FTC has focused outreach efforts on issues affecting people in financial distress, such as federal stimulus money scams.

The Commission vote authorizing the testimony was 5-0. The testimony was presented during a Senate Committee field hearing in Kansas City, Missouri.

(Debt Relief Testimony)
(FTC File No. P094802)

FTC to Announce Action Against Internet Marketers of Acai Berry Weight-Loss Pills and “Colon Cleansers”

WHAT: The Federal Trade Commission will hold a press conference on Monday, August 16, 2010, at 10 a.m., to announce a lawsuit against a company that marketed acai berry weight-loss supplements and “colon cleansing” supplements by promising consumers “free” trials of the products. WHO: David C. Vladeck, Director, FTC’s Bureau of Consumer Protection Martin Elliott, Senior Business Leader, Payment System Risk, Visa Inc. Two consumers who lost money on “free” trial offers promised by this company. WHEN: Monday, August 16, 2010, 10 a.m. (The room will be open 30 minutes early formedia set up.) WHERE: Federal Trade Commission, Midwest Region
55 West Monroe Street, Suite 1825
Chicago, Illinois

Call-in Information: The toll-free phone number in the U.S. and Canada is (866) 363-9013, the confirmation number is 94253184, and the chairperson is Gail Kingsland. The lines, which are for media only, will open at 9:45 a.m. CST. Please reference the confirmation number when joining the call.

PRESS CONTACT: FTC Office of Public Affairs
202-326-2180

FTC, State Attorneys General, Insurance Commissioners Crack Down on Bogus “Medical Discount Plans” Peddled to the Uninsured, Uninsurable, and Unemployed

Operators charged with scamming people who did not have health insurance – the uninsured, the unemployed, and the uninsurable – have been targeted by a federal-state coalition of law enforcement agencies for fraudulently marketing “medical discount plans” as health insurance. The Federal Trade Commission and law enforcers in 24 states have filed a total of 54 lawsuits and regulatory actions to stop the deceptive practices.

“With so many Americans struggling to deal with the costs of health care, these medical discount benefit plans sound appealing because they masquerade as health insurance,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “But they are not insurance. They don’t offer the benefits of health insurance, and victims don’t know they’ve been ripped off until after they’ve tried to use the service and paid their bill.”

The FTC filed three cases charging companies with deceptively marketing medical discount plans.

In one case, at the request of the FTC, a U.S. district court has ordered a temporary halt to the deceptive actions of Consumer Health Benefits Association, which targeted consumers who sought information on the Internet about major medical health insurance plans. CHBA telemarketers allegedly pitched consumers with a long list of false claims, including:

that they worked closely with major medical insurers;
that the discount plan was widely accepted by doctors, pharmacies, and other health care facilities;
that the plan would save consumers up to 85 percent on medical expenses;
that CHBA’s plan was accepted wherever Blue Cross Blue Shield was accepted; and
that consumers could use their medical discount card with any health care provider that accepts insurance.

Consumers paid between $29 and $280 in enrollment fees before they received written information about the plan. When they tried to use the plan with physicians CHBA claimed were “participating providers,” the providers said they did not accept the plan. One consumer who tried to use the plan to buy prescription medicine discovered the “discounted” price was higher than the price she had paid without the medical discount plan.

The FTC also charged that CHBA misrepresented its refund policies and that typically, consumers received refunds only after they threatened to complain to consumer protection agencies. The FTC seeks a permanent halt to the allegedly illegal activities and has asked the court to order the defendants to give up their ill-gotten gains.

In another case, at the FTC’s request a U.S. district court ordered Health Care One LLC to stop marketing a medical discount plan that it had disguised as health insurance. The FTC alleged that Health Care One’s promotional material implied that it was affiliated with the federal government and claimed that consumers who enrolled in the plan would receive substantial savings on health care costs. In fact, the agency said consumers weren’t able to achieve such savings. Health Care One also claimed that its plan was widely accepted by health care providers in consumers’ local communities. But when consumers tried to get discounts from their providers, they discovered that the providers did not accept the plan.

Health Care One induced consumers to pay hundreds of dollars to enroll by promising “100% satisfaction” and a “money back guarantee.” The FTC charged that the company made it difficult or impossible for consumers to cancel, and when they got their money back, it was subject to a hefty “processing fee.” The FTC has asked the court to permanently halt the deceptive operation and order the defendants to give up their ill-gotten gains.

In a third case, a U.S. district court temporarily halted the deceptive actions of United States Benefits, LLC. The FTC and Tennessee Attorney General Robert E. Cooper, Jr. charged U.S. Benefits with selling medical benefits plans disguised as major medical health insurance. The telemarketers claimed that the plan was available to all – including consumers with pre-existing conditions – and provided medical coverage with no deductible and no waiting period. But when consumers received written information from the company, they discovered that instead of health insurance, they had purchased membership in a “benefits association” consisting of healthcare-related discounts with little or no value.

The agencies assert that U.S. Benefits charged consumers enrollment fees ranging from $100 to $500 and monthly fees ranging from $300 to $1,300. When consumers tried to complain, cancel, or seek a refund, they were ignored. The FTC also alleged that U.S. Benefits made illegal prerecorded “robocalls” to consumers. The agencies seek a permanent ban on the deceptive practices and a return of ill-gotten gains.

In addition to the FTC cases, Attorneys General and Insurance Commissioners in 24 states have filed a total of 54 enforcement actions to stop the scammers. They include lawsuits or regulatory actions addressing sham insurance, as well as illegal robocalls and fax blasting, and licensing violations.

The Commission votes authorizing the staff to file the complaints were 5-0.

The FTC case against CHBA was filed in U.S. District Court for the Eastern District of New York. The lawsuit also names National Association for Americans; National Benefits Consultants, LLC; National Benefits Solutions LLC; Ron Werner; Rita Werner; and Louis Leo. The FTC received significant support from the office of the Attorney General of Florida and the Coconut Creek Police Department in bringing this case.

The FTC case against Healthcare One was filed in U.S. District Court for the Central District of California. The suit also names Americans4Healthcare, Inc.; Michael Jay Ellman; Elite Business Solutions, Inc.; and Robert Daniel Freeman. This case was brought with substantial assistance from the California Department of Managed Care, the Arizona Office of Attorney General, and the Arizona Better Business Bureau.

The FTC suit against U.S. Benefits was filed in U.S. District Court for the Middle District of Tennessee. It also names Timothy Thomas and Kennan Dozier.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. The cases will be decided by the courts.

More information about medical discount scams is at ftc.gov/medicaldiscountscams.

The Federal Trade Commission works for the consumer to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, click http://www.ftccomplaintassistant.gov or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://www.ftc.gov/bcp/consumer.shtm.

(hustle)

FTC, States to Host Press Conference Announcing Law Enforcement Sweep Targeting Fraudulently Marketed Medical Discount Plans

Media Advisory

August 9, 2010

WHAT:	Forty-nine million Americans lack health insurance. The FTC and 20 state enforcement officials will announce a crackdown on the scammers who target the uninsured, the unemployed, and the uninsurable to peddle “medical discount plans” fraudulently marketed as health insurance.
WHEN:	11 A.M., Wednesday, August 11, 2010
WHERE:	Federal Trade Commission Alexander Hamilton U. S. Customs House One Bowling Green – Museum Entrance New York, New York 10004
WHO:	David Vladeck, Director of the FTC’s Bureau of Consumer Protection Lori Swanson, Minnesota Attorney General Greg Zoeller, Indiana Attorney General James J. Wrynn, New York Insurance Superintendent A consumer guest

Reporters who wish to participate, but who cannot attend the event can call 1-866-363-9013. The conference leader is Gail Kingsland and the conference ID is 93067985

Contact Information

MEDIA CONTACT:

Office of Public Affairs
202-326-2180

FTC Halts Cross Border Domain Name Registration Scam

The Federal Trade Commission has permanently halted the operations of Canadian con artists who allegedly posed as domain name registrars and convinced thousands of U.S. consumers, small businesses and non-profit organizations to pay bogus bills by leading them to believe they would lose their Web site addresses unless they paid. Settlement and default judgment orders signed by the court will bar the deceptive practices in the future.

In June 2008, the FTC charged Toronto-based Internet Listing Service with sending fake invoices to small businesses and others, listing the existing domain name of the consumer’s Web site or a slight variation on the domain name, such as substituting “.org” for “.com.” The invoices appeared to come from the businesses’ existing domain name registrar and instructed them to pay for an annual “WEBSITE ADDRESS LISTING.” The invoices also claimed to include a search engine optimization service. Most consumers who received the “invoices” were led to believe that they had to pay them to maintain their registrations of domain names. Other consumers were induced to pay based on Internet Listing Service’s claims that its “Search Optimization” service would “direct mass traffic” to their sites and that their “proven search engine listing service” would result in “a substantial increase in traffic.”

The FTC’s complaint charged that most consumers who paid the defendants’ invoices did not receive any domain name registration services and that the “search optimization” service did not result in increased traffic to the consumers’ Web sites.

A federal district court judge in Chicago, Robert M. Dow, Jr., ordered a temporary halt to the deceptive claims and froze the defendants’ assets, pending trial. The settlement and default judgment orders announced today end that litigation.

The orders bar the defendants from misrepresenting: that they have a preexisting business relationship with consumers; that consumers owe them money; that they will provide domain name registration; and that they will provide “search optimization services” that will substantially increase traffic to consumers’ Web sites. The defendants are also required to disclose any material restrictions or aspects of any goods or services they provide.

The settlement order, entered against defendants Isaac Benlolo, Kirk Mulveney, Pearl Keslassy, and 1646153 Ontario Inc., includes a suspended judgment of $4,261,876, the total amount of consumer injury caused by the illegal activities. Based on the inability of the settling defendants to pay, they will turn over $10,000 to satisfy the judgment. The default judgment order was entered against defendant Steven E. Dale and includes a judgment in the amount of $4,261,876.

Charges against Ari Balabanian and Data Business Solutions were dismissed by the court at the FTC’s request.

NOTE: Stipulated orders are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the full force of law when signed by the judge.

(Il4)

FTC Order Requires Tops Markets to Sell Seven Penn Traffic Supermarkets

The Federal Trade Commission today announced a settlement agreement with Tops Markets LLC that protects consumers from the potential anticompetitive effects of Tops’ recent acquisition of the bankrupt Penn Traffic Company supermarket chain. To settle FTC charges that the acquisition was anticompetitive in several areas of New York and Pennsylvania, Tops has agreed to sell seven Penn Traffic supermarkets to FTC-approved buyers. Because the FTC adopted a flexible process for reviewing the potential anticompetitive effects of the acquisition, none of the 79 Penn Traffic stores was liquidated in the bankruptcy proceeding.

In November 2009, Penn Traffic filed for Chapter 11 bankruptcy. Through an expedited bankruptcy proceeding, Tops bought all of Penn Traffic’s assets, including 79 supermarkets in New York, Pennsylvania, Vermont, and New Hampshire, for approximately $85 million. The acquisition, however, raised competition issues in several areas of New York and Pennsylvania.

Because a full FTC investigation before the deal was completed could have led the bankruptcy court to liquidate the Penn Traffic supermarket assets, the FTC staff reached an agreement with Tops that allowed the transaction to close immediately, while allowing staff to complete its review after the deal was completed. At the same time, Tops agreed to keep all the newly acquired Penn Traffic stores open and subsequently to sell any stores that posed competitive concerns for the FTC.

Tops is a New York-based company, with its principal place of business in Williamsville, New York. Before the acquisition, it owned and operated 71 supermarkets in New York and Pennsylvania, all under the Tops name. Penn Traffic is a Delaware company headquartered in Syracuse, New York. Before the acquisition, it operated 70 supermarkets in New York, Pennsylvania, Vermont, and New Hampshire under the Bi-Lo, P&C Foods, and Quality Markets banners.

Through its investigation, the FTC staff found five local areas where competition was an issue: Bath, Cortland, Ithaca, and Lockport, New York; and Sayre, Pennsylvania. In these markets, absent a remedy, staff found that Tops’ acquisition of Penn Traffic would be anticompetitive and likely would lead to higher grocery prices for consumers. In each market there are no more than three supermarkets within a 10- to 15-mile area. Consistent with past investigations, staff concluded that other chains such as Aldi’s, buying clubs, and other food stores would not constrain prices after the merger was completed.

Further, in many of these geographic areas, staff found that new competitors were unlikely to enter the market quickly enough to prevent the acquisition’s anticompetitive effects. And, in those markets where entry might occur in the future, staff found that despite the new competition, the markets would still be highly concentrated and the transaction, therefore, anticompetitive.

The settlement order announced today requires Tops to sell seven Penn Traffic supermarkets to an FTC-approved buyer within three months. It also requires Tops and its parent company Holdco LLC to do everything necessary to facilitate the sale and operation of the seven supermarkets in Bath, Cortland, Ithaca (two stores), and Lockport, New York; and Sayre, Pennsylvania (two stores).

The FTC vote approving the complaint and proposed settlement order was 5-0. The order will be subject to public comment for 30 days, until September 7, 2010, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://ftcpublic.commentworks.com/ftc/penntraffic/.

(FTC File No. 101-0074)
(Tops Markets.final)

FTC Settles Charges of Anticompetitive Conduct Against Intel

The Federal Trade Commission approved a settlement with Intel Corp. that resolves charges the company illegally stifled competition in the market for computer chips. Intel has agreed to provisions that will open the door to renewed competition and prevent Intel from suppressing competition in the future.

The settlement goes beyond the terms applied to Intel in previous actions against the company and will help restore competition that was lost as a result of Intel’s alleged past anticompetitive tactics. At the same time, the settlement will leave the company room to innovate and offer competitive pricing.

“This case demonstrates that the FTC is willing to challenge anticompetitive conduct by even the most powerful companies in the fastest-moving industries,” said Chairman Jon Leibowitz. “By accepting this settlement, we open the door to competition today and address Intel’s anticompetitive conduct in a way that may not have been available in a final judgment years from now. Everyone, including Intel, gets a greater degree of certainty about the rules of the road going forward, which allows all the companies in this dynamic industry to move ahead and build better, more innovative products.”

The FTC settlement applies to Central Processing Units, Graphics Processing Units and chipsets and prohibits Intel from using threats, bundled prices, or other offers to exclude or hamper competition or otherwise unreasonably inhibit the sale of competitive CPUs or GPUs. The settlement also prohibits Intel from deceiving computer manufacturers about the performance of non-Intel CPUs or GPUs.

The FTC settlement goes beyond those reached in previous antitrust cases against Intel in a number of ways. For example, the FTC settlement order protects competition and not any single competitor in the CPU, graphics, and chipset markets. It also addresses Intel’s disclosures related to its compiler – a product that plays an important role in CPU performance. The settlement order also ensures that manufacturers of complementary products such as discrete GPUs will be assured access to Intel’s CPU for the next six years.

The FTC sued Intel in December 2009 alleging that the company used anticompetitive tactics to cut off rivals’ access to the marketplace and deprive consumers of choice and innovation in the microchips that comprise computers’ central processing unit, or CPU. These chips are critical components that often are referred to as the “brains” of a computer. The action also challenged Intel’s conduct in markets for graphics processing units and other chips.

The FTC alleged that Intel’s anticompetitive practices violated Section 5 of the FTC Act, which is broader than the antitrust laws and prohibits unfair methods of competition and deceptive acts and practices in commerce. Unlike an antitrust violation, a violation of Section 5 cannot be used to establish liability for plaintiffs to seek triple damages in private litigation against the same defendant.

Under the settlement, Intel will be prohibited from:

conditioning benefits to computer makers in exchange for their promise to buy chips from Intel exclusively or to refuse to buy chips from others; and
retaliating against computer makers if they do business with non-Intel suppliers by withholding benefits from them.

In addition, the FTC settlement order will require Intel to:

modify its intellectual property agreements with AMD, Nvidia, and Via so that those companies have more freedom to consider mergers or joint ventures with other companies, without the threat of being sued by Intel for patent infringement;
offer to extend Via’s x86 licensing agreement for five years beyond the current agreement, which expires in 2013;
maintain a key interface, known as the PCI Express Bus, for at least six years in a way that will not limit the performance of graphics processing chips. These assurances will provide incentives to manufacturers of complementary, and potentially competitive, products to Intel’s CPUs to continue to innovate; and
disclose to software developers that Intel computer compilers discriminate between Intel chips and non-Intel chips, and that they may not register all the features of non-Intel chips. Intel also will have to reimburse all software vendors who want to recompile their software using a non-Intel compiler.

The FTC vote approving the proposed settlement order was 4-0, with Commissioner William E. Kovacic recused. The order will be subject to public comment for 30 days, until September 7, 2010, after which the Commission will decide whether to make it final. Comments should be sent to: FTC, Office of the Secretary, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. To submit a comment electronically, please click on: https://ftcpublic.commentworks.com/ftc/intel/.

NOTE: A consent agreement is for settlement purposes only and does not constitute an admission of a law violation. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 383, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 061-0247)
(Intel.final.wpd)

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