Intel Faces Penalty for Alleged Biz Irregularities

By Ryu Jin
Staff Reporter

South Korea’s antitrust regulator has recently completed a two-year investigation into Intel’s alleged business irregularities and is expected to impose a penalty against the U.S. chip giant by October at the latest according to sources, Tuesday.

Following a similar investigation into Microsoft by the Fair Trade Commission (FTC) two years ago, the latest decision of the corporate watchdog is drawing keen attention from the industry amid the global controversy over the U.S. firm’s monopolistic status.

Since June 2005, FTC officials have been looking into the allegations that Intel, the world’s largest chipmaker based in California, misused its dominant market position in South Korea.

``The FTC gained some evidence backing up suspicions that Intel has offered discounts to computer makers in exchange for sealing exclusive deals, and coerced dealers not to buy products from rivals such as Advanced Micro Devices (AMD),’’ one source said.

``FTC investigators have presented a report to its internal deliberating committee,’’ the source said on condition of anonymity. ``The antitrust commission is expected to reach a decision on a penalty no later than October.’’

Chuck Mulloy, legal affairs spokesman for Intel in Santa Clara, Calif., was quoted by the Associated Press as saying that the company received last week what he described as a ``statement of objection’’ from the commission.

``We're hopeful that we'll be able to show the commission that the microprocessor market is functioning normally and that this is an extremely competitive market and that our conduct has been pro-competition and beneficial to consumers,’’ he said.

Intel has the right to respond to the findings and could ask for a hearing. If it remains unsatisfied, the company can also take the issue to court in South Korea, according to the Free Trade Law.

If sanctioned, Intel would be the second U.S. technology firm to face a South Korean-imposed penalty, following the 33-billion-won ($35.1 million) fine imposed on software giant Microsoft in 2005 for bundling programs with its Windows operating system.

Intel has faced a number of legal actions over similar charges around the globe. It was given warnings by Japan's corporate watchdog in March 2005, while European Union (EU) regulators also charged it in late July. Intel denies breaking any laws.

jinryu@koreatimes.co.kr