Why Intel Should Negotiate a Settlement

Few people who watch technology very keenly are unaware that Intel corporation has been facing law suits in relation to its conduct towards PC makers. The variety of technical claims are complicated but in short, they suggest that this corporation has been paying PC makers not to use its competitors chips in their machines. The direct effect of this is that it forestall competition at the assembly stage and thereby harms the consumers of computers. As the story here states,the corporation has defended itself both in the EU and Japan but has faced heavy fines in both jurisdictions. That notwithstanding, the Attorney General of New York has also instituted a lawsuit against Intel on similar grounds.

As would be expected, the story reveals here the ongoing discussion because there are institutions and professionals pitching on both sides on the merits of the case. Judging from the outcome of the cases in both Europe and Japan, I think that the probability of Intel emerging from this case completely unscathed is low. And while I am reluctant to accept that business targets should of necessity be determined by courts, I think that the management and shareholders of the corporation should consider whether a vigorous battle in court is in the corporation's interest.

Again, in spite of my inability to tell fully how the case will be determined and what the size of any fines may be, I consider that Intel should negotiate with the DOJ and New York's AG. The reason for this is that the corporation will remain a strong competitor in the computer chips market and it should preserve its strength and management focus towards that. This view is informed also by the degree of disclosures that have been made about the conduct of the firm's employees which showed that they were aware that some of the business conduct was questionable. Finally, considering that the lawyers are properly schooled in competition law and would represent the firm competently, the history of these actions suggests that the case will probably be long and take up large sums of money.

So the advise is not to cut and run but rather to admit that management's time over the next few years should not be consumed with a trial of this kind. It is clear that in spite of its big fights in the same places, Microsoft did not do any better. Intel's management should show some intelligence here and choose its fights.