updated 3/8/2005 11:20:50 AM ET 2005-03-08T16:20:50

Japan’s anti-monopoly watchdog issued a warning to U.S. chipmaker Intel Corp. on Tuesday, demanding that the company stop curbing competition in the microprocessor chip market by pressuring Japanese clients to buy its chips.

Japan’s Fair Trade Commission didn’t impose any fines on Intel, but said the U.S. company could face prosecution if it doesn’t change its ways. Intel was given 10 days to respond.

The FTC said the semiconductor maker broke antitrust laws as early as 2002 by trying to stifle rivals in central processing units, or CPUs — the microprocessor chips that comprise the silicon brain of all computers.

“Intel is engaging in actions to keep CPUs made by competing companies from being used,” the FTC said in a statement. “These actions ... are substantially limiting the CPU sales sector for domestic personal computer makers.”

It ordered the company to conduct periodic inspections and hold training sessions to put an end to the practice.

The decision follows a raid in April 2004 by the FTC of Intel’s three Japanese offices on suspicions the company was improperly urging Japanese personal computer makers not to use microprocessor chips manufactured by its U.S. rivals, including Advanced Micro Devices Inc. and Transmeta Corp.

Lower prices, money offered
The FTC said Intel had offered lower prices and marketing money to Japanese PC makers Hitachi Ltd., Sony Corp., Fujitsu Ltd., Toshiba Corp. and NEC Corp., which use Intel chips and brand their products with “Intel Inside” and “Centrino” labels. Centrino is Intel’s wireless networking chipset.

Intel made the deals on condition that the PC makers either exclusively use Intel chips or limit the use of rivals’ chips to 10 percent, the FTC said.

Intel’s share of the CPU market in Japan rose to 90 percent in 2004, from 78 percent in 2002, according to estimates by market research firm IDC. Advanced Micro Devices’ share fell to 8 percent, from 18 percent, over the same period.

Intel defended its practices after the ruling. “Intel continues to believe its business practices are both fair and lawful,” Intel said in a statement.

“Competition regulators should only intervene where there is evidence of harm to consumers,” and the FTC did not sufficiently weigh such principles, the statement quoted Intel vice president and general counsel Bruce Sewell as saying.

The company was deciding its next steps, the statement said.

Legal proceedings possible
If Intel rejects the FTC’s recommendations to drop its practices, the watchdog has the authority to launch legal proceedings against it. It was not immediately clear what punishment it may face if the matter goes to court. It’s unclear what potential consequences Intel could face.

If Intel decides to appeal the FTC’s ruling, it could be months to years before any action is taken. The FTC’s case against Microsoft Corp., which the commission accused of unfair licensing arrangements with Japanese manufacturers, has been held up in government hearings to assess the U.S. software maker’s appeal.

Santa Clara, California-based Intel also has faced similar probes by antitrust regulators into its business practices in other parts of the world, including in the United States and Europe.

On Tuesday, a European Union spokesman said regulators in Brussels were continuing their own investigation into Intel.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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