GAME, set, and settlement. That's how the settlement between Intel attorney Michael Sohn and US Federal Trade Commission (FTC) antitrust chief William Baer may well be remembered.

After defeating Baer on the tennis court, Sohn reportedly suggested that his clients at Intel might be interested in averting a nasty antitrust trial. With that, the two parties took to negotiating in secret, announcing less than 24 hours before the trial was to begin that they had reached a settlement.

In April, the FTC said that its commissioners had approved the settlement, and though Intel has portrayed the deal as a "win-win" for both sides, analysts and other observers say only the chipmaker appears to be a winner. The FTC, by averting the issue of whether Intel is a monopolist, essentially told the company to go and sin no more, some observers say.

Intel has promised not to withhold its intellectual property from customers with whom it finds itself in IP-related lawsuits, unless those lawsuits specifically seek injunctions that would stop Intel from shipping its products. Intel may also withhold IP for legitimate business reasons.

Intel's victory is not being labeled as a monopoly by the FTC, says Keith Diefendorff, editor-in-chief of the renowned Microprocessor Report. Such a decision would have weakened the company in any potential private lawsuits.

"It seems to me like the FTC wimped out a little bit here. Intel certainly is not getting very much punishment for any sins they may have committed. I tend to see Intel as the winner here," he says.

Many people viewed the FTC's case as inherently weak because it would have been difficult to prove damage to the semiconductor market. Commission chairman Robert Pitovsky didn't seem to think so.

"We are not going to bring a mono-poly case where there is no injury to the marketplace," he said at a press conference in Washington in April. "But we do not have an obligation, as some have suggested, to demonstrate as a result of the conduct of the monopolist that prices went up or down or innovation went up or down. The requirement is demonstrating that the behavior is reasonably likely to injure competition."

However, without a trial, several legal questions remain open, Diefen-dorff said.

"The Sherman Antitrust Act doesn't say very much about how a company like Intel must treat its customers. It deals more with how a company treats its competitors. By not going to trial here, no clear legal precedent has been set for future companies. So I don't think the FTC has gained very much," he said.

The settlement also takes at least one weapon out of Intel's arsenal, Diefendorff said.

"By entering into this agreement, Intel is signaling that other companies don't have to worry that it will withhold its technical information again. I think there is a potential for other companies to be bolder in their dealings with Intel now that they don't have to fear that," he said.

Still unresolved are the matters of the 60-day period of public comment, and other unspecified Intel matters the FTC is said to still be investigating.

Arik Hesseldahl

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