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Who's the boss: FTC or DOJ?

June 2, 1998
Web posted at: 4:00 p.m. EDT

by Elinor Mills

With two of the most influential companies in the computer industry, Microsoft and Intel, now apparently facing antitrust action or investigations by two separate U.S. government bodies, many lay observers are wondering why both the Federal Trade Commission and the Department of Justice appear to have jurisdiction in these cases.

Civil antitrust violations in the U.S. can be investigated and prosecuted by either agency, while only the Justice Department handles criminal cases. Both agencies also can investigate proposed mergers.

There are no specific rules governing which agency will assume a case, according to officials at the agencies. Top agency officials decide which one shall proceed on a case after discussing which agency has handled previous similar cases and has expertise in the industry affected.

While the Justice Department has brought a new case against Microsoft, the FTC is reportedly considering a case against Intel. The Justice Department first initiated its case against Microsoft in 1993 when the FTC deadlocked on whether to bring charges. That case ended with the Justice Department and Microsoft signing a consent decree in 1994. The current Justice Department case against Microsoft shadows the earlier case, alleging Microsoft is using its dominance in the operating system market to gain a stronghold on the browser market with technology integration and exclusionary contracts.

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Intel, whose microprocessors power the vast majority of the world's PCs just as Microsoft's Windows operating system is installed on most of those systems, has been accused of unfairly withholding information about its products from other companies and requiring its customers to buy additional Intel products as a condition of receiving the microprocessors.

The FTC has investigated Intel on at least three occasions. The agency announced in July 1993 that it was closing a three-year investigation of the chip giant. Although the agency has not said what it was investigating, Intel had been accused of forcing computer makers to buy chips, math coprocessors, and other components.

More recently the FTC announced in January that although it would not block Intel's proposed acquisition of Chips & Technologies Inc., it was continuing its investigation.

Then in April the agency announced that it had approved Intel's plan to acquire Digital Equipment's semiconductor business--which was part of a settlement of a patent dispute between the two companies--on the condition that Digital license its Alpha technology to certain chip makers approved by the FTC.

Once a complaint or agency review prompts an investigation, procedures within the Justice Department and FTC differ. Justice Department investigators recommend taking action to the head of the antitrust division, who then acts with the support of the U.S. Attorney General. The action can be either the filing in U.S. District Court of a lawsuit, or it can be a consent decree, also called a settlement, agreed to by the company investigated.

At the FTC, investigators make their recommendations to the Commission, which is composed of five people appointed by the President to seven-year terms. The term of one member in the current Commission expires June 3. A majority vote is required before any action can be taken. The agency can either file a lawsuit in U.S. District Court, file a lawsuit to be heard by an administrative law judge, or file a consent decree to settle the case.

For lawsuits filed by either the FTC or the Justice Department, defendants can appeal rulings to the U.S. Court of Appeals and to the U.S. Supreme Court after that.

Neither agency will officially comment on an investigation until it makes the decision to take action, at which time it announces it publicly.