Obama administration, new legal research could jack up antitrust heat on Intel

Recent actions show U.S. taking closer look at companies with market dominance

Nvidia Inc.'s charge that sales of its Ion graphics platform are being unfairly hampered by Intel Corp.'s bundling and predatory pricing tactics have so far gained the graphics vendor some public sympathy, but little more.

That could change, according to some legal experts, who point to a new antitrust climate in Washington under the Obama administration, as well as fresh legal scholarship that overturns the assumptions held by regulatory officials in the past eight years.

In stark contrast to its determined prosecution of Microsoft Corp. during the Clinton era, the U.S. Department of Justice did not bring a single antitrust case against a dominant company under President George W. Bush.

Rather, the DOJ "kept trying to build these incredible safe harbors of conduct for dominant firms," said David Balto, a senior fellow at the Center for American Progress, a liberal think tank, and a former policy director at the Federal Trade Commission. By the end of the Bush era, "that safe harbor had become [as big as] the outer continental shelf."

That has flipped under new DOJ antitrust chief Christine Varney, who, according to The New York Times, has "scrapped the Bush administration's monopoly guidelines, which had sharply limited the government's ability to prosecute large corporations that used their market dominance to elbow out competitors."

"The new administration is saying, 'That's not the way we're going to look at the world anymore, because it was a neutering and nullification of antitrust,' " said Ed Black, president of the Washington-based Computer & Communications Industry Association, which counts many high-tech vendors among its members and has taken antitrust stances against Intel and IBM.

Varney has also hired a number of intervention-minded deputies, including UC Berkeley professor Carl Shapiro, who worked on the DOJ's case against Microsoft in the late 1990s.

Intel says it's under no greater scrutiny than before. But lawyers such as Randy Gordon, a Dallas-based antitrust lawyer at Gardere Wynne Sewell LLP, said, "I suspect that we'll see many firms with positions of dominance put under the microscope."

Action on that front heated up last week. The U.S. Senate began holding hearings on whether exclusive deals between wireless carriers and phone makers, such as Apple Inc.'s iPhone deal with AT&T Inc., are good for the industry and consumers. The Federal Communications Commission also said it would investigate Apple for blocking a telephony app called Google Voice from the iPhone.

Prompted by a lawsuit brought by Advanced Micro Devices Inc. in 2005, the FTC began investigating Intel on antitrust grounds last year.

The DOJ has started to investigate a number of companies, including Google Inc., for its treatment of book publishers.

"This is going to have a dynamic effect on Silicon Valley," Balto said. "Intel is going to be front and center for agencies."

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