The antitrust watchdog said the unit stifled competition in the microprocessor market by offering rebates to five Japanese personal computer makers that agreed either not to buy or to limit their purchases of chips made by Intel's rivals, namely Advanced Micro Devices and Transmeta. The FTC said such practices had been going on since May 2002 after the inflow into Japan of low-priced personal computers heated up competition in the domestic market, prompting Japanese PC makers to turn increasingly to AMD and Transmeta chips that were typically offered at a discount to Intel products.
Intel said its business practices were fair and lawful and expressed concerns the FTC's finding was not based on antitrust principles commonly accepted worldwide. It said it would evaluate the warning before deciding its next step.
The chip maker said it had about 10 days to respond.
"There is a broad consensus that competition regulators should only intervene where there is evidence of harm to consumers. It is apparent the (FTC's) recommendation did not sufficiently weigh these important principles," Bruce Sewell, vice president and general counsel for Intel, said in a release.
Intel's microprocessors, the brains of personal computers, account for nearly 90 percent of the Japanese market, the FTC said.
The commission in April raided Intel's Japanese unit in a probe into possible antitrust violations, stirring up decade-old allegations from competitors that Intel's business practices are unfairly aggressive.
If Intel challenges the warning, the matter will be reviewed at a court-like body set up by the FTC. If the chip maker is dissatisfied with the results, it can appeal.
Microsoft's warning from the FTC said the software giant should scrap a provision in its licensing contracts with PC makers that prevents them from filing patent infringement suits if they find Microsoft's Windows software contains features similar to their own technology.
Microsoft chose not to accept the warning and now the FTC's court-like body is reviewing the matter.
Intel's market dominance has also attracted attention from antitrust regulators in Europe.
The European Commission said last June it had rekindled a three-year-old antitrust investigation into Intel, asking new questions about the chip maker's business practices.
The sudden revival of the investigation came after AMD provided to the commission information on Intel's behavior around the time of major AMD product launches in 2003, a person familiar with the matter has said.