By Alex Dobuzinskis and John Poirier
LOS ANGELES/WASHINGTON (Reuters) - INTEL (INTC.NQ)Corp, the world's largest chipmaker, has agreed to stop using threats and bundled prices to hamper competition, settling charges it illegally abused market dominance, the U.S. Federal Trade Commission said on Wednesday.
Investors mostly shrugged off the deal, which had been expected, with Intel shares little changed in early afternoon.
"Intel has got to be happy that they were able to minimize the damage and get it over with," said Patrick Wang, an analyst with Wedbush Securities.
Urged on by Intel archrival Advanced Micro Devices Inc and graphics chipmaker Nvidia Corp, the FTC accused Intel in December of illegally using its market dominance to stifle competition. Intel makes 80 percent of the world's microprocessors.
In afternoon trading, Nvidia stock was up about 2.6 percent at $9.18 on the Nasdaq, while AMD shares were down 0.13 percent at $7.50 on the New York Stock Exchange.
Intel also agreed to give makers of complementary products such as graphics chips access to its central processing units for the next six years.
The deal bars Intel from retaliating against computer makers if they do business with non-Intel suppliers.
"It's a landmark settlement that really will have a striking effect on improving competition in the market," said David Balto, a former FTC policy director.
NO EXCLUSIVE DEALS
The company, which has denied any wrongdoing, said it did not believe the changes in its business practices would have a material impact on its financial results.
"The settlement enables us to put an end to the expense and distraction of the FTC litigation." Doug Melamed, an Intel senior vice president, said in a statement.
Intel has been under attack from rival chip makers for years over its aggressive pricing and sales tactics in marketing the chips that essentially make up the "brains" of personal computers.
The company is now barred from offering deals to computer makers in exchange for their promise to buy exclusively from Intel. It is also required to change its intellectual property deals with AMD, Nvidia and Via.
Officials said they halted a deceptive practice involving compilers, a software tool to help write code so software can communicate with a computer's microprocessor.
FTC chairman Jon Leibowitz said Intel configured its compiler so software ran more slowly on processors made by AMD and others.
"Intel surreptitiously made it look as though that slow-down was AMD's fault," he said.
In its complaint, the FTC said Intel had been trying to shut out competitors in maneuvers that dated back to 1999 -- the same year the agency settled a previous antitrust fight with the company.
CHALLENGES STILL FACE AMD
Wang said AMD's delayed release schedule for its Llano processor, based on its new Fusion design, puts it at a competitive disadvantage to Intel, despite the FTC action.
"Just because you have a referee there making things equal, doesn't mean AMD is going to win this basketball game. It's extremely important they execute on the Fusion products that should be rolling out in the next few quarters," Wang said.
He added that Intel is accelerating the launch of its Sandy Bridge processor.
"You have Intel ramping aggressively as much as they can. You've got AMD still reeling in terms of product plays," he said.
Ed Snyder, managing director of Charter Equity Research, agreed Intel will emerge largely unscathed.
"It's not going to have any impact on their microprocessor business because they're so far ahead of their only other real competitor, which is AMD," he said.
"What it would affect is some of their graphics processors and other things that they bundle with the microprocessors," Snyder said.
Officials at AMD and Nvidia generally praised the deal.
AMD settled its own legal dispute against Intel for $1.25 billion in November.
"In our settlement with Intel, AMD's critical remaining concern was Intel's use of all-or-nothing discounts to deny competitors' access to the marketplace. The FTC's order clearly and firmly prohibits such abuse," AMD said in a statement.
A suit is still pending between Nvidia and Intel.
"We look forward to Intel's actions being examined further by the Delaware courts later this year," Nvidia spokesman Hector Marinez said.
Intel has also run afoul of competition regulators elsewhere. The European Commission has fined Intel 1.06 billion euros ($1.4 billion) for illegally shutting out AMD, its much smaller rival in the PC microprocessor market, a decision Intel is appealing. Regulators in South Korea and Japan have also taken action against Intel.
Intel stock was up 0.1 percent at $20.74 on the Nasdaq after falling as much as 2 percent earlier in the session.
(Reporting by John Poirier and Kim Dixon in Washington, and Alex Dobuzinskis in Las Angeles; editing by John Wallace, Matthew Lewis and Andre Grenon)
