Ouch. Intel to Face Formal FTC Probe.

The Federal Trade Commission, after two years of looking into allegations that Intel has behaved anticompetitively in the microprocessor market, has decided to act, announcing a formal probe. At issue is whether Intel offered PC makers rebates to use its chips instead of AMD’s. Intel issued a statement in response.

The company believes its business practices are well within U.S. law. The evidence that this industry is fiercely competitive and working is compelling. For example, prices for microprocessors declined by 42.4 percent from 2000 to end of 2007. When competitors perform and execute the market rewards them. When they falter and under-perform the market responds accordingly.

In Austin, the Intel fund at Dell was an open secret, although Dell eventually opened the door to AMD. While AMD may be tempted to applaud this and the $25.4 million fine imposed on Intel by South Korea, the FTC probe won’t lead to action anytime soon. The government moves slowly and the coming change in administration won’t help speed it up.