FTC Finds Rambus Unlawfully Obtained Monopoly Power

By a unanimous vote, the Federal Trade Commission (“Commission” or “FTC”) determined on August 2 that computer technology developer Rambus, Inc. unlawfully monopolized the markets for four computer memory technologies incorporated into industry standards for dynamic random access memory (“DRAM”) chips. DRAMs are widely used in personal computers, servers, printers, and cameras.
In an opinion by Commissioner Pamela Jones Harbour, the Commission found that Rambus deceptively distorted a critical standard-setting process and engaged in an anticompetitive “hold up” of the computer memory industry. The Commission held that Rambus's acts of deception constituted exclusionary conduct under Section 2 of the Sherman Act and contributed significantly to Rambus's acquisition of monopoly power in the four relevant markets.

In June 2002, the FTC charged Rambus with violating federal antitrust laws by deliberately engaging in a pattern of anticompetitive acts to deceive an industry-wide standard-setting organization, which caused or threatened to cause substantial harm to competition and consumers. According to the FTC complaint, Rambus participated in Joint Electron Device Engineering Council's (“JEDEC's”) DRAM standard-setting activities for more than four years without disclosing to JEDEC or its members that it was actively working to develop, and possessed, a patent and several pending patent applications that involved specific technologies ultimately adopted in the standards.

The charges were litigated in an administrative trial. In February 2004, the charges were dismissed in an initial decision and order by Chief Administrative Law Judge Stephen J. McGuire. Complaint counsel – FTC staff – appealed the decision to the Commission, which subsequently issued its opinion overturning the ALJ's decision.
In a separate concurring statement, Commissioner Jon Leibowitz wrote that Rambus's abuse of JEDEC's standard-setting process was intentional, inappropriate, and injurious to competition and consumers alike. He added that Rambus's conduct not only ran afoul of the antitrust laws, but also constituted an unfair method of competition in violation of the broader reach of the FTC Act.

Authored by

Camelia C. Mazard
202-589-1837
cmazard@dbmlawgroup.com